Why Are Businesses Not Hiring?
We’ll soon be treated to the spectacle of a White House job summit in December. Yes, almost 11 months into his presidency, Barack Obama has discovered that the public is most concerned with the economy and jobs – not health care. Not the environment. Ironically, it is most likely those two things at which the administration and the Democratic Congress have been working so hard to pass into law that have caused the job situation and economic outlook to remain so bleak.
While President Obama and congressional leaders say they would like to do more to spur job creation, economists and business executives warn that their plans to impose new health care and climate-change costs on corporations would have the opposite effect.
The initiatives, according to this analysis, are likely to overwhelm any positive impact on jobs from stimulus measures by giving businesses a reason to keep laying people off.
The House’s health care bill would raise the cost of hiring in a straightforward way: by charging businesses a new payroll tax of up to 8 percent if they do not provide health insurance to workers. The Senate plan would impose smaller fines on those same employers.
The House-passed climate-change legislation would not add directly to the cost of hiring, but would raise energy prices, which are a major cost of doing business. Economists say that many companies would react by hiring fewer people.
As we’ve mentioned numerous times, businesses want, in fact usually require, a stable economy before they begin hiring or expanding. They want to see trend lines headed up and they also want a climate that is conducive to expansion and thus hiring.
With these to major bills looming and, as the Washington Times notes, major new costs a part of their passage, businesses aren’t going to
commit to doing anything until they understand how those new costs will impact them.
So don’t hold out much hope for anything major to come out of the job summit. It’s mostly for show – a way to show concern. If the administration really wanted to see jobs created, they’d kill the two monstrosities in question and provide incentives to business (tax cuts, tax incentives, etc) to spur hiring. Instead we’re much more likely to see talk about a “second stimulus” and other big government “solutions”.
Just don’t forget the promise of the last “stimulus” – it would stop unemployment at 8% and “create or save” millions of jobs.
The official unemployment rate is 10.2%.