An idea being floated as part of Obama’s September plan is to offer employers incentives – say, a year’s waiver on unemployment insurance premiums – for any new hires.
At first blush, it sounds like a good idea.
But it’s not.
First, no sensible employer is going to make incremental hires for a single year of benefits. If they do, there are equal odds that they’ll jettison the employees when the waiver expires.
More important, the program is likely to punish responsible companies and reward irresponsible ones.
Let me explain.
Say, company A laid off 20% of its workforce during the recession – largely due to the business slowdown, but also the result of opportunistic house-cleaning – getting rid of slackers and dolts.
Comparable company B laid off a couple employees due to the downturn, but – took its lumps – and kept most of its employees on the payroll, even though many weren’t really needed.
Along comes the hiring incentive.
Which company gets it?
Yep, company A – the company that shed employees.
What does company B get for standing by its employees.
Nothing.
Sound fair to you?
Sounds like punishing responsible behavior … again!
P.S. And, now that the idea has leaked … why in the world would any company hire employees now.?
Smart ones will sit back and wait for the incentives to kick in.
The Homa Files 
September 14, 2011 at 6:22 am |
[…] A month ago, we blogged why hiring incentives are a bad idea. […]