The Chicago Employment Law Blog

Federal Tax Credits For More Hiring Of Jobless Workers

An article published by the Chicago Tribune looks at how the recently enacted Hiring Incentives to Restore Employment Act (HIRE Act), which provides tax credits to employers who create jobs, is playing out in the Chicago area. While differing opinions about what actually creates jobs are expressed, the article offers some encouragement. The federal tax credits for employers are in place in order to encourage more job creation, which is intended to be a good thing. 

The HIRE Act waives the 6.2 percent Social Security tax on wages paid to new hires who have been unemployed or underemployed (fewer than 40 hours per week) for at least two months, among some other incentives for mostly small businesses.

That means unemployed job applicants may actually have the upper hand when competing for the limited pool of job opportunities.

It has only been in effect for little more than one month but some Chicago employers already have taken advantage of the program, including the All About Kids Learning Academy in the South Side. The child-care center plans to hire five new employees and already has extended offers to two workers who fit the tax-credit profile.

Matt Maloney, CEO of Chicago-based online food-ordering service GrubHub.com, plans to hire 10 more workers this year. He's cautiously optimistic that the bill will encourage employers in general to choose more unemployed applicants, stating that unemployed workers are no less desirable without the tax benefit:

"We're getting 1,000 applications for one position. We're finding some terrific talent who wouldn't have been available if current employers hadn't experienced a downturn."

But others, including SurePayroll president Michael Alter, are not so sure the credit will have much of an impact on the employment climate. He says companies are more likely to first extend more hours to existing staff and then add temps or contractors before hiring new workers:

"Saving $6 on every $100 is not enough to persuade people to hire. They have to make sure they have the cash or credit line [to make payroll]."

But any program aimed at job creation is good news for unemployed Chicagoans.

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