In response, El Presidente told us on Friday that he and his minions are pulling out all the stops to assure that “Americans who want to find work can find work and all Americans can earn enough to raise their families and keep their businesses open.”
Under consideration, we are further told, is a tax break for companies to hire new employees.
While I certainly am in favor of tax breaks of any and all description, I have to wonder just how much of a tax incentive the government would have to offer before businesses would want to run out and hire new employees?
Especially given that virtually every business survey indicates that corporate executives remain concerned about the economic outlook. As such, human nature beckons the executive team to cut all non-essential expenses, shrink inventories, raise cash, and otherwise hunker down. Survival of the fittest pretty well sums it up.
Hiring new employees runs contrary to that mindset. Especially given that, in these United States, hiring an employee requires not just paying the wages but entails a multitude of costs, from those associated with training to a myriad of employment-related payroll taxes, including unemployment taxes, Social Security taxes, Medicare, to sundry benefits, furniture, hand soap and tissue in the corporate facilities, periodic outbreaks of employee litigation, and ongoing compliance training for anyone involved in any work involving regulated activities. Also to be paid, of course, are the HR personnel necessary to keep track of the whole tangled ball. And that’s just for starters.
Soon, costs associated with mandatory health care will be demanded and, most likely, a levy to offset your new worker’s “carbon footprint.”
Speaking broadly, the cost of the average employee in the U.S. private sector comes to $29.31 per hour. Whipping out the calculator, we soon discover that the annual tab for having the next desk occupied comes in at $60,964.80. (The wages and benefits of federal employees tally in at about 50% higher, but in honor of their tireless service to the public, we’ll leave them out of the discussion. They are worth every darn penny in lifetime pension benefits, paid holidays, and free insurance they earn! Right?)
At the moment, using the government’s own, somewhat optimistic calculations, there are on the order of 15.7 million Americans unemployed. Of course, no economy enjoys full employment, so we’ll turn the dial only back to December of 2007, the month that the recession officially began. At the time, the unemployment rate was 4.9%, versus 10.2% today. Since that momentous month, 7.3 million jobs have been lost.
Replacing the calculator with a spreadsheet and plugging in the numbers tells us that giving all those folks a job at average wage levels, either through private employers or government work projects, would amount to $445 billion a year. Which, when considering the planned trillion dollars plus annual deficits contemplated by the administration, seems almost reasonable.
Of course, this overlooks the reality that the money used to pay all those workers would ultimately have to come from taxpayers, including the companies themselves, making it essentially a zero-sum game. Worse, it would be a game played against a backdrop of ballooning government debts.
-end of quote from Casey’s Daily Dispatch
Here’s the thing. This is what isn’t getting broadcast on the evening news. This is what you need to understand. The government is not going to do the smart thing, they are going to do the politically expedient thing. They can be counted on to do exactly what will buy the most votes. So even though we are running a $1.4+ trillion budget deficit they will not shy away from adding more spending. The spending is not going to stop, at least not in the near term. Count on it. Plan for it. Take action accordingly.
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