Myth of hiring unemployed workers

Congress is considering a tax credit or reduction in employer Social Security payments to stimulate hiring of unemployed workers. Unfortunately, the proponents of these programs show a fundamental lack of understanding of why companies increase employment.

Jobs are a byproduct of increased sales and revenues. Capitalist companies do not hire workers merely to employ a larger workforce. This might happen in socialist economies, but certainly not capitalist economies.

In a modern capitalist economy, employees are expensive, require management and cannot be easily laid off in the event of incompetence or loss of business. Companies only increase employment because they have additional business that needs to be processed.

No business hires additional labor because tax credits make it 10 percent cheaper. It hires additional labor only as the last alternative to servicing its current and expected business.

Furthermore, if the company has additional business, then it will hire additional employees regardless of the 10 percent tax credit. Therefore the tax credit is an inefficient way to increase employment and a waste of taxpayer money.

Armstrong Williams is on Sirius/XM Power 169, 7-8 p.m. and 4-5 a.m., Monday through Friday. Become a fan on Facebook at www.facebook.com/arightside, and follow him on Twitter at www.twitter.com/arightside.