#360. Reasons NOT to Hire More WorkersPosted on
Reasons NOT to Hire More Workers
Over the past few months we have written about the unemployment rate, educational requirements to get a job, and the skills gap in obtaining a job in the U.S. manufacturing sector. We’ve also talked about the likely resurgence of U.S. manufacturing and jobs coming back on-shore from China and other cheap labor countries. But…
Why would American companies even want to hire more workers? Jeff Thredgold points out some key reasons why companies in the United States may want to shed some workers or, at the very least, not hire any new workers. Some highlights of his piece, Disincentives…Another Update, are noted here:
- Higher and higher health care costs for employees, with more and more complex and costly government mandates to come. New information about all of the “hoops” that need to be jumped through by employers in order to avoid penalties or fines makes it simpler to look to shed workers, rather than to add new employees.
- Potential “cap and trade” legislation to boost business costs. The point that business people and consumers around the globe have largely embraced the idea of using energy more wisely, of building LEED-qualified buildings, of driving more fuel efficient cars, of using towels again in a hotel by hanging them up instead of throwing them on the floor. This voluntary effort is much more powerful than having government tell us what to do.
- Employers see sharply higher taxes on the horizon, one more impediment to new job creation. Successful employers see higher income tax rates coming, higher dividend tax rates coming, higher capital gains tax rates coming, and a variety of new taxes on investment income. Why bother to know yourself out?
- Many states and local communities are imposing and will impose greater costs on local businesses as a means of generating greater “fee” income to help offset declines in sales taxes, property taxes, and income taxes. Many already high-cost states will simply drive their most valued businesses across state borders to more “business friendly” environs.
- Business owners and managers are fearful of government out of control when it comes to budget deficits, and fear the longer-term implications on our children and grandchildren. The government announced in recent days a budget deficit for fiscal year 2011 just ended of $1.3 trillion, slightly exceeding the deficit of the prior year. That results in a budget deficit of roughly $150,000,000 every 60 minutes! Deficits exceeding $1 trillion annually exist for as far as the eye can see.
Jeff concludes, “My simple definition of economics is “people respond to incentives.” The disincentives to add jobs in this country remain formidable.”
To read Jeff’s Tea Leaf or to join his mailing list, visit here.