In the above video, Senate Majority Leader Harry Reid proudly announced that the HIRE Act is directly responsible for 70,000 new jobs in Nevada, and that at a restaurant he visited recently had 24 employees – ALL OF WHICH where hired because of the HIRE Act, and that the employer will get a $1,000 check for each employee in the restaurant hired under the HIRE Act. A few problems: First off, the benefits of the HIRE Act are minimal at best – eligible new hires save the employer up to six months of Social Security witholdings, 6.2% of an employees salary, and if the eligible employee remains on the payroll for 12 months, the employer will get a $1,000 tax deduction.
It is highly doubtful that ALL 24 employees at the restaurant were eligible for benefit under the HIRE Act – were they all really unemployed for greater than 60 days before being hired? Seriously, every employee was unemployed for at least two months before being hired at the restaurant?
The $1,000 benefit to the employer is only available once the employee has worked for 12 months, and since the HIRE Act was signed into law in March, they won’t have completed 12 months of employment under this act until March of 2011, so the $1,000 will come next year, not this tax year. If the employee is fired before the 12 months are over, the employer will not get ANY savings (it isn’t pro-rated).
Finally, it beggars the imagination that all 24 employees were hired solely because the employer could save 6 months of Social Security contributions for each employee. The employer could have realized better savings if they had simply hired one less employee! (a half year of 6.2% savings on payroll expenses adds up to less than three-quarters of the average employee’s wages – one less employee would increase the savings by one third, not to mention the savings in state and federal taxes, unemployment insurance, etc. !).
Senator Harry Reid is mis-representing the savings the HIRE Act offers, and he goes on to attribute 70,000 new jobs created in Nevada as a direct result of the HIRE Act. I find the claim hard to swallow – how about you?