The Government Pays Companies To Hire

government paying companies to hireThe jobs plan that Obama outlined Thursday evening contained a number of incentives to get employers to hire, primarily in the form of tax credits. But an even more radical form of federally-subsidized employment has become increasingly popular in the last few dark years: paying companies to hire.

Although the specifics vary by county, the principle is the same: Companies don't want to risk hiring a potentially unsuitable candidate, so local employment boards use federal funds to pay up to 90 percent of an individual's salary for a few months. That means if an employee's wage is normally $10 an hour, the company only has to pay $1. After this period, many companies, satisfied by the employee's performance, will hire him or her full-time, reports The Miami Herald.

While employments boards have focused on vocational classes in the past, the epidemic of joblessness meant that even trained and qualified individuals weren't getting offers. There was just too much supply, and not enough demand.

In order to qualify for these programs, individuals must be low-income; in Broward County, Fl., for example, a family of four must make less than $44,000 a year, and subsidies are capped at $5,000 per employee.

Some consider the program subsidized training, others an extended interview, and still others anti-free market favoritism.

Broadening Tax Credits

Employers receive additional tax credits if they hire individuals from certain categories, like unemployed veterans, ex-felons, and young people without an education. Obama's jobs plan, for the first time, includes on this list individuals who have been unemployed for six months or more.

Many Republicans disagree that additional government spending can solve America's jobs crisis. "The only way we can bring about a stable, long-term recovery is by shifting the center of gravity away from Washington and toward those who actually create the jobs," Senate Minority Leader Mitch McConnell, R-Ky., said after the president's speech.

A tax credit, however, is both government spending and lowered taxes, depending on which way you look at it.

Criticism of these programs existed even before Obama's plan, and particularly since the 2009 stimulus bill, which included hundreds of millions in extra funding to incentavize employers to hire. Many see it as giving some groups, like low-income individuals, an unfair advantage over other groups, like new graduates.

But many workers and employers testify to the value of these programs. For the unemployed, it can provide job opportunities that would otherwise never exist, and for small businesses, it can provide the flexibility to open up opportunities again.

Next: 5 Key Points From President Obama's American Jobs Bill Speech

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If we expect the very rich to buy into Obama's Jobs Plan, we should give them a choice as to where their wealth is spent. I think the best way to guarantee their full suport is to allow them to "adopt" job creating projects. Billionaires and upper end millionaires could "adopt" specific projects such as bridges, highways, distressed sections of cities, and a variety of other job intensive venures. The adoption would include the option of not only funding the projects but also managing them. Management would allow these successful folks to use their skills to guarantee the success of the projects. Let folks who actually know how to create jobs create more jobs. Government's only task would be to stay out of their way.

October 06 2011 at 3:16 PM Report abuse rate up rate down Reply

Unemployed people should not have to pay property tax. In fact anyone that does not generate income with their property should not have to pay property tax. More people could afford homes if they did not have to pay property tax. It is not right that you can buy a home, pay it off, spend money to improve the home, lose your job and the government takes your property because you can't pay property tax. Property tax is outdated and soooo wrong. The only tax should be on income. Get rid of state property tax and see how much more money consumers have.

September 27 2011 at 8:31 AM Report abuse rate up rate down Reply

Companies will hire when there is enough demand for their product or service that they need more bodies to get the job done. People were encouraged to buy with debt, this kept demand high since people were buying things they could not afford. More money in the hands of consumers is the only long term solution. Problem is workers are under paid so they buy cheap foreign products. Companies are greedy, they can make more profit with low paid foreign workers. They are killing their own customers.

September 27 2011 at 8:26 AM Report abuse rate up rate down Reply

You can't keep cutting income and keep spending , also I have had subsidized workers on my crew and most aren't worth a dam they know you have to keep them a certain lenth of time , if you don't hire them they get on the same program with a different employer.Its a freebee anyway you want to look at it.

September 10 2011 at 7:44 AM Report abuse rate up rate down Reply

Glad Pres O B killed O S B, Now, pass the damn bill,,

September 10 2011 at 7:23 AM Report abuse rate up rate down Reply

it's a start

September 10 2011 at 7:19 AM Report abuse rate up rate down Reply

i think what has happened is a lot of companies, seeking lower pay, sent a lot of jobs overseas, called outsourcing - well now we are paying for it - companies would rather pay 2 or 3 dollars an hr to an employee overseas than 14 an hr here at home for the same work - so our jobs have gone to china, india, thailand, indoesnia - and saw on news that some company is now hiring americans again to take phone calls as americans do not like talking to foreign phone people so its a start - i think companies like walmart and others who carry a bulk of their products from 3rd world countries shd have to pay more income tax to govt - when owner of walmart was alive, he carried american made products- if we want jobs here, then companies need to hire american workers

September 10 2011 at 5:27 AM Report abuse rate up rate down Reply

And don' t you think that companies who get the $1 employee for 3 months will say "well, he just didn't work out, let's try someone else for another 3 months"?

September 10 2011 at 4:43 AM Report abuse +1 rate up rate down Reply
1 reply to allpa's comment

I was thinking the same thing...just lay him or her off after 3 mos and then hire again..and again and again. Sounds like a deal to me except for one thing....Americans got screwed again and again and again.

September 10 2011 at 6:05 AM Report abuse rate up rate down Reply

Government doesn't create jobs.........businesses do. If you want job creation, get the government boot off the throat of American business and let them do what they do best.

September 10 2011 at 4:01 AM Report abuse +2 rate up rate down Reply
1 reply to ansonlytle's comment

Pollute the land and hire illegals?

September 10 2011 at 7:03 AM Report abuse rate up rate down Reply
Heico Thorn

What would help me?
I am considered a small business owner. Going on 19 years.
What I could use is a refinanced business loan.
My last loan(s) were approved by BOA. They offered me the typical loan stating I had great equity and credit scores.
Present, I have great credit scores, but no equity (acutually lost equity)
Still paying on deals I signed for, but signed with advise from my bank.
So why can't there be a program for us re-equity loans, so I can reduce my high precentage rate loans. Therefore be able to hire someone, instead of looking for a break by hiring someone who is specifically been off for the last 6 months? Or look for a crazy tax break that still does not make sense, at least yet.
I figure, if "I" was able to re-fi myself from a business perspective,my interest would be less.
I could actually pay the normal profit and tax, and hire a real person.
MAYBE, not pay more to my accountant to explain to me the new math plan.
Go figure.
I would hire one person for sure, and possibly another if banks would recognize that I have never missed a loan payment for any reason......thus allowing my company to hire without regret.
BOA was handed funds by the US Gov't to assist people like me. Instead they paid thier own bad loans, and are relying soley on me, to continue as agreed.
but our system is about re-fi, so help me help you.

"Big" surprise, soon enough, I will bail from them, and my perfectly paid loan will not be there to pay the big unearned salery.

September 10 2011 at 1:12 AM Report abuse rate up rate down Reply
1 reply to Heico Thorn's comment

Have u been to SBA they have approved lenders or micro lenders that might be able to help. Contact you Local Small Business Development Center or Center for Economic Development. They usually office out of you local university. Good Luck!

September 10 2011 at 7:53 AM Report abuse rate up rate down Reply

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