to hire more people
Politicians are busily arguing about how to alter the tax structure to create more jobs for Americans. The idea behind the proposed cut du jour, this time on payroll taxes, is to motivate small employers to invest in hiring more people.
There is a name for that kind of thinking. Non sequitur.
If you lower what we employers shell out in taxes, I for one will be grateful. But it doesn’t follow that we will rush out and hire more people as a result. We will likely sit on the savings to hedge against an uncertain future.
Businesses hire when customers spend enough to keep more people busy and profitable. Lower payroll taxes all you want. But if more customers who buy more stuff don’t materialize, there’s no point to hiring, tax bargains aside.
If, Dear Legislators, you want employers to hire more people, focus your efforts on ensuring markets that will make it worth our while on a sustained basis. Sounds a lot like the Law of Supply and Demand. Duh.