By Jay Heflin - 07/12/10 04:17 PM EDT
Companies can receive a tax break for hiring unemployed workers who have been jobless for eight weeks or longer.
If these workers remain on the job for the rest of the year, businesses will be eligible for an estimated $5.1 billion in payroll tax savings. If three-quarters of these workers remain employed after 52 weeks, businesses receive another $3.4 billion in tax credits.
The Hiring Incentives to Restore Employment (HIRE) Act provides employers an incentive to hiring those experiencing extended unemployment by exempting their wages from employment taxes paid by the employer. Businesses also claim an additional $1,000 tax break for each worker that remains on the payroll for 52 consecutive weeks.
Alan Krueger, assistant secretary for economic policy and chief economist at the Treasury, noted it is unclear if businesses that hired new workers did so because of the tax credits or because of some another reason. He was also unsure if any increases in hiring would ever be linked to the tax credits.
“Knowing what the world would have been like absent a certain policy is an awfully hard thing to do,” he told reporters.
Krueger was joined by Andy Warlick, president and CEO of yarn manufacturer Parkdale Mills. Warlick recently hired more than 30 workers and took advantage of the tax credits, but he said the tax breaks were not the driving reason for adding new workers.