The 13th Worker

Remember all of that fuss to pass a tax credit to hire workers?

A new report shows the health insurance tax credit sliding scale causes small businesses to not hire.

The Hill:

Using insurance premium cost projections supplied by the nonpartisan Congressional Budget Office (CBO), the study states that the credit reaches its optimal point at 13 workers, with relief peaking at $36,400 for qualifying business.

After the 13th worker the economics surrounding the credit change, the study says.

For employers with 15 workers, taking on an additional hire will reduce the credit by $1,400. For a company looking to expand from 20 to 21 workers, the credit will shrink by $3,733. And businesses will take a $5,600 reduction on the credit when hiring the 25th worker.

The credit phases out for companies with at least 26 employees.

Ah, the irony. Lucky 13 again. Here is the original hire tax credit:

Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.

The bottom line for small businesses is they need profits, they need demand and they also need credit to expand and hire. But still...how many Congress Representatives does it take to screw in a.....

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A boon for part-time hiring

Based upon the info I see on the IRS website, it seems like businesses can take that $1000 credit for each full or part-time hire. The credit maxes out at $1000 per hire if the annual pay for an employee reaches $16129. So if somebody is hiring, they could double or triple their credit if they hired 2 or 3 part-time workers at less pay and benefits than if they hired one full-time worker. And hiring all those part-time workers would get them off of the U3 unemployment roles to make it look like a real hiring boom was taking place. This just seems purposely designed to speed up the transition to a part-time employed, benefit-less economy while making the reported unemployment figures look good.

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part time

It's been massively increasing, so on the next monthly unemployment report, let's dig around to see if we notice any effects from this tax credit, esp. in "forced part time", which they do (or i think I can get at it) break out those numbers.

Very good call out!

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Will do.

Yeah, they break out those numbers:
http://www.bls.gov/news.release/empsit.t08.htm
So we should be able to see any effects if they occur

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forced part time - 9,2 million

That's from EP unemployment overview from April, which is an astounding number. That labor force total is ~ 155 million, give or take.

I'm behind due to oil chat on writing up some things but my experience in digging around the BLS data (every month I've been writing these things up), is one has to extrapolate out a lot of the results and look very closely at the assumptions, the overall civilian population...

it's a Sherlock Homes job. I need to start dates for this tax credit, the duration and then go into the BLS stats and probably extrapolate out the part-time data too.

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IBM Rumors

There is a rumor on the web that IBM is planning on laying off 75% of their work force and then hiring them back as self insured contractors on demand when needed.

That stat that scooter posted is scary. People can use these stimulus programs against recovery really.

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you mean U.S. workforce correct?

IBM has been gutting any one who is an American for some time now. So, alliance@ibm, which is a struggling union of IBMers, ex-IBMers probably know the truth of this.

Frankly it would not surprise me at all. IBM should be banned from all federal and state contracts. Their entire agenda lately is labor arbitrage and frankly, their products and services has significantly degraded. I do not know all of their products and services but I can tell you personally some of the things I've dealt with are pure caca. I'm sorry, they should be poster child for the ultimate shame of the tech sector and treating their U.S./American workers like crap!

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