The U.S. Department of the Treasury has released a new report showing that, from February 2010 to May 2010, businesses have hired an estimated 4.5 million new workers who had been unemployed for eight weeks or longer, making those businesses eligible to receive up to a projected $8.5 billion in HIRE Act tax exemptions and credits for hiring the unemployed.
Alan B. Krueger, Assistant Secretary for Economic Policy and Chief Economist at the Treasury Department, announced the release of the report in Sanford, North Carolina with Congressman Bob Etheridge (NC-2) and Andy Warlick, President and CEO of Parkdale Mills, a yarn manufacturer that recently reopened a plant in Sanford and has already hired more than 30 workers who are eligible for HIRE Act tax exemptions, a number that will likely grow as they continue to add more workers.
"Helping unemployed Americans get back to work – particularly the long-term unemployed - is essential to ensuring a strong economic recovery," said Assistant Secretary Krueger. "Targeted, temporary incentives like the HIRE Act are helping to fuel a private-sector-led recovery. After a period of extraordinary difficulty, the economy is continuing to grow and private sector companies have added jobs for six straight months."
The Hiring Incentives to Restore Employment (HIRE) Act of 2010 provides employers an incentive to hire workers who have been unemployed for 60 days or longer by exempting wages paid to these workers from the employer's 6.2 percent share of Social Security payroll taxes for the remainder of the year. In addition to exempting employers from these payroll taxes, the HIRE Act allows employers to claim a tax credit of up to $1,000 for each newly hired qualifying worker who is retained for one year. An employer is eligible to receive almost $3,500 in tax savings from hiring an unemployed worker who is paid $40,000 in salary this year.
"This new tax credit provided a powerful incentive to grow our business and was a major factor in our decision to re-open the plant in Sanford," said Andy Warlick, President and CEO of Parkdale Mills. "It's an example of tax policy that's done the right way – that's not about off-shoring but about re-shoring, and it's helping us create jobs here."
Using monthly data from the Current Population Survey, Treasury estimated that, from February 2010 to May 2010, 4.5 million workers who had been unemployed for eight weeks or longer were hired by employers who are eligible for the HIRE Act payroll tax exemption. If these 4.5 million newly hired employees remain employed for the rest of the year, their employers would be eligible for an estimated $5.1 billion in payroll tax savings as a result of the Act. Furthermore, if three-quarters of the workers remain employed for 52 weeks, then their employers would receive another $3.4 billion in tax credits for these hires.
Treasury's report includes employment data through May 2010. The HIRE Act tax exemption is still available for the remainder of 2010 to employers who hire unemployed workers.
You can view the full report..