Employers say plan won't lead to hiring spur

The dismal state of the economy is the main reason many companies are reluctant to hire workers, and few executives are saying that President Obama’s jobs plan — while welcome — will change their minds any time soon.

That sentiment was echoed across numerous industries by executives in companies big and small on Friday, underscoring the challenge for the Obama administration as it tries to encourage hiring and perk up the moribund economy.

The plan failed to generate any optimism on Wall Street as the Standard & Poor’s 500-stock index and the Dow Jones industrial average each fell about 2.7 percent.

As President Obama faced an uphill battle in Congress to win support even for portions of the plan, many employers dismissed the notion that any particular tax break or incentive would be persuasive. Instead, they said they tended to hire more workers or expand when the economy improved.

Companies are focused on jittery consumer confidence, an unstable stock market, perceived obstacles to business expansion like government regulation and, above all, swings in demand for their products.

“You still need to have the business need to hire,” said Jeffery Braverman, owner of Nutsonline, an e-commerce company in Cranford, N.J., that sells nuts and dried fruit. While a $4,000 credit could offset the cost of the company’s lowest-cost health insurance plan, he said, it would not spur him to hire someone. “Business demand is what drives hiring,” he said.

Indeed, the industries that are hiring workers now — like technology and energy — are those where business is strong, in contrast to the overall economy. Administration officials and some economists, of course, say they believe the president’s plan, if adopted, could help increase demand more broadly. The proposed payroll tax cuts for individuals should spur consumer spending and in turn, prompt companies to hire more people.

But the plan also includes incentives for companies to hire more workers, including a payroll tax cut for businesses and a $4,000 tax credit for those employers that hire people who have been out of work for six months or more.

To the extent these measures could be used, many employers said they would most likely support people whom companies were planning to hire anyway.

Chesapeake Energy, one of the biggest explorers of oil and gas in shale fields across the country, for example, said it had 800 positions open, and had already received tax credits for hiring the long-term unemployed.

But Michael Kehs, vice president for strategic affairs and public relations, said in an e-mail that the credit”does not drive our hiring.”

For others, the math just does not add up. Roger Tung, the chief executive of Concert Pharmaceuticals, said the company, a privately held biotechnology firm with 45 employees, would save $150,000 a year from the proposed corporate payroll tax deductions.

But that is still not enough to cover the cost of hiring even one additional employee at the Lexington, Mass., company, Mr. Tung said, once benefits and other expenses besides salary are included. He can hire, he said, only when investors become confident again and the company can raise more money.

Economists estimated that President Obama’s plan, costing an estimated $447 billion if it were ever fully adopted, could create anywhere from 500,000 to nearly two million jobs next year.

©2011 The New York
Times News Service