Why companies won't hire

[Shadowstorm]

Washington (CNN) -- A week of bad economic news has led some economists to worry: Is it 1937 all over again?

But here's a second worry. Even if we avoid a repeat of 1937, we still have to worry about another 1936.

Here's the background to the worries:

As everyone knows, the global economy plunged into a great depression at the end of the 1920s. In the United States, the Great Depression hit bottom in early 1933. The years from 1933 through 1936 were years of economic recovery.

An interesting article.

[0rphie]

An interesting article.

Do you honestly believe the history repeats itself exactly? All recessions are different! Stop treating life as a directed play! There are no pre-approved recipies for disasters

[Shadowstorm]

Do you honestly believe the history repeats itself exactly? All recessions are different! Stop treating life as a directed play! There are no pre-approved recipies for disasters

Actually I wrote that because it wouldn't let post the quoted article by itself. However, yes recessions are different, but there is that one thing that keeps repeating in every subject in history that people forget or ignored that keeps repeating itself. IMHO, that right there will be going on forever since people never learn or just ignore it like it will happen again.

[larrystarling]

I don't need to read the article to know why companies won't hire. The reason is all the uncertain from Obama and all his cronies. Most are worried about taxes going up and the possibility of Obama care getting enforced. Add to that uncertain transportation and fuel cost's.

[shermbodius]

I don't need to read the article to know why companies won't hire. The reason is all the uncertain from Obama and all his cronies. Most are worried about taxes going up and the possibility of Obama care getting enforced. Add to that uncertain transportation and fuel cost's.
You hit it it spot on.

[eskachig]

I don't need to read the article to know why companies won't hire. The reason is all the uncertain from Obama and all his cronies. Most are worried about taxes going up
What does the possibility of taxes going up have to do with not hiring? If anything, if taxes are rising, it makes sense to hire more to lower the tax burden. High profits only make sense with low taxes - otherwise high profits (without being reinvested) means a big waste. On the other hand, when taxes are high the best way to extract value out of a company is to reinvest in the capital expenditures, such as equipment, real estate - and you heard it, payroll.

A lot of larger companies like GE and Exxon simply aim for zero profit every year - and end up not paying any taxes at all, primarily through reinvesting their profits in themselves. Do you think they care what the corporate tax rate is? They're more concerned with loopholes and exhemptions.


and the possibility of Obama care getting enforced.
As I understand it, that doesn't affect larger corportaions nearly as much as small businesses - and we're talking about large corporations that are currently sitting on record profits.

[Chulo]

What does the possibility of taxes going up have to do with not hiring? If anything, if taxes are rising, it makes sense to hire more to lower the tax burden. High profits only make sense with low taxes - otherwise high profits (without being reinvested) means a big waste. On the other hand, when taxes are high the best way to extract value out of a company is to reinvest in the capital expenditures, such as equipment, real estate - and you heard it, payroll.


jezzz..is that supposed to be a serious question? You forget that payroll is then directly related to taxes, and when you dont know how much taxes to pay out, then you dont know what your investment capital can handle.


As I understand it, that doesn't affect larger corportaions nearly as much as small businesses - and we're talking about large corporations that are currently sitting on record profits.

[eskachig]

jezzz..is that supposed to be a serious question? You forget that payroll is then directly related to taxes, and when you dont know how much taxes to pay out, then you dont know what your investment capital can handle.
I was talking about income taxes, not so much payroll taxes - but I see your point. I've been working as a contractor (and employed other contractors) for so long I sort of forgot about payroll tax. Still, employer's side of payroll and social security taxes is pretty small and is unlikely to fluctuate very much - while corporate income tax is what, 35% max these days?

[Chulo]

I was talking about income taxes, not so much payroll taxes - but I see your point. I've been working as a contractor (and employed other contractors) for so long I sort of forgot about payroll tax. Still, employer's side of payroll and social security taxes is pretty small and is unlikely to fluctuate very much - while corporate income tax is what, 35% max these days?
define small.. We/I employed 3 to 4 people at our law firm, say one makes $1000, that means i pay out about $400 to $600 in taxes (based on deductions) in matching Unemployment tax, State tax, County tax, Fed taxes.
With Obama we dont know that the next "plan" and who would actually fall under any new taxing plans, and this includes companies not just on profit or resources, but also tax filing category

[dc_b4.mc]

define small.. We/I employed 3 to 4 people at our law firm, say one makes $1000, that means i pay out about $400 to $600 in taxes (based on deductions) in matching Unemployment tax, State tax, County tax, Fed taxes.
With Obama we dont know that the next "plan" and who would actually fall under any new taxing plans, and this includes companies not just on profit or resources, but also tax filing category

I think your reply should settle all other threads on the same topic in this forum :)
Totally agree

[eskachig]

define small.. We/I employed 3 to 4 people at our law firm, say one makes $1000, that means i pay out about $400 to $600 in taxes (based on deductions) in matching Unemployment tax, State tax, County tax, Fed taxes.
With Obama we dont know that the next "plan" and who would actually fall under any new taxing plans, and this includes companies not just on profit or resources, but also tax filing category
Are you including witholding in that 40-60% tax rate? Because witholding taxes for fed, state, etc doesn't affect your income/profit one way or another (nor does it involve corporate income tax rate) - that's the employee's money that you'd be paying out to him directly if you weren't sending it off to the government. Your total spending per employee is always employee salary/benefits + employer's side of the tax burden, which is your half of FICA, and fed and state unemployment taxes. FICA and unemployment taxes together don't add up anywhere near 40-60%, nor do they fluxtuate around so much that planning is impossible.

And whatever you spend on salaries and payroll taxes is taken out of the corporate income - which translates into a decreased tax burden.

[Chulo]

Are you including witholding in that 40-60% tax rate? Because witholding taxes for fed, state, etc doesn't affect your income/profit one way or another (nor does it involve corporate income tax rate) - that's the employee's money that you'd be paying out to him directly if you weren't sending it off to the government. Your total spending per employee is always employee salary/benefits + employer's side of the tax burden, which is your half of FICA, and fed and state unemployment taxes. FICA and unemployment taxes together don't add up anywhere near 40-60%, nor do they fluxtuate around so much that planning is impossible.

And whatever you spend on salaries and payroll taxes is taken out of the corporate income - which translates into a decreased tax burden.
Its called "matching". Wnemployment must be paid out, county and state taxes on the fact we have an employee, and then federal and other withholding that "contribute" to social security and other "benefit" programs must be matched by the employee.

[Ordie]

Most are worried about taxes going up and the possibility of Obama care getting enforced.

A good reason to hire and create more taxpayers.

[0rphie]

So far Obama only managed to create more parasites.

[latteman]

There's more people than jobs, and these days, some jobs can be replaced by a machine. Who needs machinists when a CNC machine can work day and night?

Plus there's excess supply in the market and not enough demand, so companies don't need to hire people, especially people without any skills.

[Ordie]

There's more people than jobs, and these days, some jobs can be replaced by a machine. Who needs machinists when a CNC machine can work day and night?

Plus there's excess supply in the market and not enough demand, so companies don't need to hire people, especially people without any skills.

There are jobs, but not the same ones as before.
It requires a mid life career change, relocation to another state and work for smaller wages and benefits.

[latteman]

There are jobs, but not the same ones as before.
It requires a mid life career change, relocation to another state and work for smaller wages and benefits.

When the real unemployment rate is north of 20%, they are more people than jobs.

Look at this, I mean, really, wtf?!

http://theeconomiccollapseblog.com/archives/broke-10-facts-about-the-financial-condition-of-american-families-that-will-blow-your-mind


#1 Only 58 percent (http://www.bls.gov/news.release/empsit.t01.htm) of Americans have a job right now.
#2 Only 56 percent (http://www.census.gov/hhes/www/cpstables/032010/health/h01_001.htm) of Americans are currently covered by employer-provided health insurance.
#3 The median yearly wage in the United States is $26,261 (http://www.tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8AGMUZ?OpenDocument).
#4 The average American household is carrying $75,600 (http://www.federalreserve.gov/pubs/oss/oss2/2009p/scf2009phome.html) in debt.
#5 Only the top 5 percent (http://www.dailyfinance.com/story/are-the-rich-getting-richer-the-data-says-yes/19356546/) of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
#6 At this point, American families are approximately 7.7 trillion dollars poorer (http://money.cnn.com/2011/06/09/news/economy/household_wealth/index.htm?hpt=hp_t2) than they were back in early 2007.
#7 The poorest 50% of all Americans now own just 2.5% (http://www.businessinsider.com/facts-about-inequality-in-america-2011-11#half-of-america-owns-25-of-countrys-wealth-the-top-1-owns-a-third-of-it-2) of all the wealth in the United States.
#8 According to one study, approximately 21 percent of all children in the United States were living below the poverty line in 2010 (http://theeconomiccollapseblog.com/archives/more-than-1-in-5-american-children-are-now-living-below-the-poverty-line).
#9 Today, there are more than 44 million Americans on food stamps (http://theeconomiccollapseblog.com/archives/you-call-this-an-economic-recovery-44-million-americans-on-food-stamps-and-10-other-reasons-why-the-economy-is-simply-not-getting-better), and nearly half (http://www.usatoday.com/money/economy/2011-05-10-new-face-of-hunger-food-assistance_n.htm) of them are children.
#10 According to Newsweek (http://www.newsweek.com/2011/05/29/mad-as-hell.html), close to 20 percent of all American men between the ages of 25 and 54 do not have a job at the moment.


American plutocrats aren't really Americans anymore, they're internationalists, and they have decided that the American people in general are disposable. Good thing the entitlements are there to keep them docile.

[eskachig]

Its called "matching". Wnemployment must be paid out, county and state taxes on the fact we have an employee, and then federal and other withholding that "contribute" to social security and other "benefit" programs must be matched by the employee.
Right, that's the FICA - and employer side of it is around 7% or thereabouts - and it hasn't been jumping around, and isn't in danger of going up quickly. I'm not sure about the county and state taxes, those are also usually witheld from employee's salary, and as such don't affect your bottom line.

Example:
Employee, salary = 100k.

State A, combined fed and state taxes = 40%
Company cost = 100k + benefits + FICA/2, 40k + FICA/2 witheld - govt gets 40k + FICA, employee gets 60k - FICA/2

State B, combined fed and state taxes ludicrous 90%
Company cost = 100k + benefits + FOCA/2, 90k + FICA/2 witheld - govt gets 90k + FICA, employee gets 10k - FICA/2

Company cost doesn't change at all.

And none of this is all that affected by corporate tax rate either. Corporations don't care about personal tax rates really - except indirectly because they affect employee salary negotiations and consumer purchasing power. And higher corporate tax rates translates into encouragement to reinvest the profit into hiring someone else or expanding infrastructure, though it makes it more costly to accumulate large cash reserves through holding on to profit.

[0rphie]

I am afraid to surprise you with number of other taxes and fees that businesses are paying. State unemployment tax, exice tax, commersial RE tax are among at least ten others that I pay.


Right, that's the FICA - and employer side of it is around 7% or thereabouts - and it hasn't been jumping around, and isn't in danger of going up quickly. I'm not sure about the county and state taxes, those are also usually witheld from employee's salary, and as such don't affect your bottom line.

Example:
Employee, salary = 100k.

State A, combined fed and state taxes = 40%
Company cost = 100k + benefits + FICA/2, 40k + FICA/2 witheld - govt gets 40k + FICA, employee gets 60k - FICA/2

State B, combined fed and state taxes ludicrous 90%
Company cost = 100k + benefits + FOCA/2, 90k + FICA/2 witheld - govt gets 90k + FICA, employee gets 10k - FICA/2

Company cost doesn't change at all.

And none of this is all that affected by corporate tax rate either. Corporations don't care about personal tax rates really - except indirectly because they affect employee salary negotiations and consumer purchasing power. And higher corporate tax rates translates into encouragement to reinvest the profit into hiring someone else or expanding infrastructure, though it makes it more costly to accumulate large cash reserves through holding on to profit.

[0rphie]

I am afraid to surprise you with number of other taxes and fees that businesses are paying. State unemployment tax, exice tax, commersial RE tax are among at least ten others that I pay.


Right, that's the FICA - and employer side of it is around 7% or thereabouts - and it hasn't been jumping around, and isn't in danger of going up quickly. I'm not sure about the county and state taxes, those are also usually witheld from employee's salary, and as such don't affect your bottom line.

Example:
Employee, salary = 100k.

State A, combined fed and state taxes = 40%
Company cost = 100k + benefits + FICA/2, 40k + FICA/2 witheld - govt gets 40k + FICA, employee gets 60k - FICA/2

State B, combined fed and state taxes ludicrous 90%
Company cost = 100k + benefits + FOCA/2, 90k + FICA/2 witheld - govt gets 90k + FICA, employee gets 10k - FICA/2

Company cost doesn't change at all.

And none of this is all that affected by corporate tax rate either. Corporations don't care about personal tax rates really - except indirectly because they affect employee salary negotiations and consumer purchasing power. And higher corporate tax rates translates into encouragement to reinvest the profit into hiring someone else or expanding infrastructure, though it makes it more costly to accumulate large cash reserves through holding on to profit.

[0rphie]

There's more people than jobs, and these days, some jobs can be replaced by a machine. Who needs machinists when a CNC machine can work day and night?

You nailed it - damn ATMs, they Re stealing banking jobs. At least Obams thinks so.

[C.Puffs]

There's more people than jobs, and these days, some jobs can be replaced by a machine. Who needs machinists when a CNC machine can work day and night?


Who the hell do you think operates and programs the CNCs? Elves?

[eskachig]

I am afraid to surprise you with number of other taxes and fees that businesses are paying. State unemployment tax, exice tax, commersial RE tax are among at least ten others that I pay.
That was obviously a massive simplification (though all those fees further reduce your income tax burden as well) - but which one of those fees is Obama going to dramatically raise? All I'm trying to say is that companies aren't freezing hiring because they're afraid Obama will raise taxes, and they are especially not particularly affected by income taxes.

[Chulo]

That was obviously a massive simplification (though all those fees further reduce your income tax burden as well) - but which one of those fees is Obama going to dramatically raise? All I'm trying to say is that companies aren't freezing hiring because they're afraid Obama will raise taxes, and they are especially not particularly affected by income taxes.
Well that is the question isnt it?

[yss61]

Everybody to pray together the United States not to the great depression.