I must have missed the announcement about massive tax increases that prompted Boeing and Microsoft to lay off 20,000 people. Do you have a source for that?
"But the real problem in the U.S. labor market today isn't layoffs. It's a hiring freeze that is gripping most work places - and has not gotten nearly as much attention as the job cuts."
I don't have a link for the cause being taxes, that is still anecdotal. Companies know that the helicopter money is not going to last and will make their hiring decisions based on the longer term picture of high taxes and inflation.
"But the real problem in the U.S. labor market today isn't layoffs. It's a hiring freeze that is gripping most work places - and has not gotten nearly as much attention as the job cuts."
Redundancies aren't the only problem. An increasing number of employers are reducing wages. Who wants to take on a big mortgage when their income might be suddenly reduced next year, even without switching jobs.
I must have missed the announcement about massive tax increases that prompted Boeing and Microsoft to lay off 20,000 people. Do you have a source for that?
"But the real problem in the U.S. labor market today isn't layoffs. It's a hiring freeze that is gripping most work places - and has not gotten nearly as much attention as the job cuts."
I don't have a link for the cause being taxes, that is still anecdotal. Companies know that the helicopter money is not going to last and will make their hiring decisions based on the longer term picture of high taxes and inflation.
Anecdotal, or just wrong?
The article you linked cited an economist:
"Economist Robert Brusca of FAO Economics added that hiring freezes are an easier way for many companies to reduce work forces than layoffs, since even in bad times people will leave companies on their own.
And he said the hiring freezes won't end until companies have some confidence that the economy and demand for their products are ready to turn around."
That sounds about right - companies won't hire more people when there is insufficient demand for their products or services. Future tax rate increases and potential for inflation are minor factors at best.
"Hey, sales are down 30%, we're losing money hand over fist, maybe we should hire some more people..."
"No way, our FICA tax liability will increase 1% next year!"
"Hey, sales are down 30%, we're losing money hand over fist, maybe we should hire some more people..."
"No way, our FICA tax liability will increase 1% next year!"
Sales will recover as they always do. Now people are hoarding cash, and when they feel confident, that cash will be spent and will drive up sales. But then there will be trillions of dollars of new federal debt to be paid down, and that won't happen with a 1% increase in FICA. If it were not for those future taxes, companies would be investing now to be ready for the bounce back. But because of those taxes, there is less motivation for companies to take the risk of new investments.
Not saying I agree with him (or that I don't). Just thought it was amusing.
Not to knock your post, but I take anything written by Adams (or previously by Michael Crichton) with a grain of salt. Adams' comic strips are wonderful, but he seems to live in some strange semi-connected state. He'll produce comics that are remarkably timely, but whenever I read his more deep seated beliefs he seems just plain nuts.
RE jon
You don't get it. Spending is unlikely to return to its previous level. Run any retirement calculator and you'll realize this. I just put in a "typical person" who starts saving at 30 (probably younger than most), and wants just 75% of his pre-retirement income replaced. That guy needs to save 10.8% of his income even assuming 8% growth in his investments.
In other words, 3.x% is still ridiculously low. As boomers retire, many will have to slash their spending just to remain solvent. You cannot rely on spending to return to previous levels. Sorry, but it wasn't sustainable and it still isn't.
If people have to save more, which they do, your tax cuts will do nothing to boost spending. That means it is not a stimulus package, it's a tax cut package. I'm for lower taxes as much as the next guy, but in this case it is clearly a phony solution. On top of that, you complain incessantly about handing the bill off to our children (or even ourselves). I agree. Please, please explain how a tax cut isn't just passing a bill off. From that perspective, an $800B tax break is every bit as bad as an $800B stimulus package. Oh, except for one thing; once you cut taxes people are loathe for them to go back up. It's much harder to reinstantiate tax cuts than it is to cut funding to a temporary program.
Not to knock your post, but I take anything written by Adams (or previously by Michael Crichton) with a grain of salt. Adams' comic strips are wonderful, but he seems to live in some strange semi-connected state. He'll produce comics that are remarkably timely, but whenever I read his more deep seated beliefs he seems just plain nuts.
Oh I absolutely agree. In fact, I think you may have been too generous.
Comments
"But the real problem in the U.S. labor market today isn't layoffs. It's a hiring freeze that is gripping most work places - and has not gotten nearly as much attention as the job cuts."
http://money.cnn.com/2009/02/05/news/ec ... 2009020607
I don't have a link for the cause being taxes, that is still anecdotal. Companies know that the helicopter money is not going to last and will make their hiring decisions based on the longer term picture of high taxes and inflation.
Redundancies aren't the only problem. An increasing number of employers are reducing wages. Who wants to take on a big mortgage when their income might be suddenly reduced next year, even without switching jobs.
Anecdotal, or just wrong?
The article you linked cited an economist:
"Economist Robert Brusca of FAO Economics added that hiring freezes are an easier way for many companies to reduce work forces than layoffs, since even in bad times people will leave companies on their own.
And he said the hiring freezes won't end until companies have some confidence that the economy and demand for their products are ready to turn around."
That sounds about right - companies won't hire more people when there is insufficient demand for their products or services. Future tax rate increases and potential for inflation are minor factors at best.
"Hey, sales are down 30%, we're losing money hand over fist, maybe we should hire some more people..."
"No way, our FICA tax liability will increase 1% next year!"
Sales will recover as they always do. Now people are hoarding cash, and when they feel confident, that cash will be spent and will drive up sales. But then there will be trillions of dollars of new federal debt to be paid down, and that won't happen with a 1% increase in FICA. If it were not for those future taxes, companies would be investing now to be ready for the bounce back. But because of those taxes, there is less motivation for companies to take the risk of new investments.
http://surkanstance.blogspot.com/2009/02/ironically-latest-attempts-to-jump.html
Not to knock your post, but I take anything written by Adams (or previously by Michael Crichton) with a grain of salt. Adams' comic strips are wonderful, but he seems to live in some strange semi-connected state. He'll produce comics that are remarkably timely, but whenever I read his more deep seated beliefs he seems just plain nuts.
RE jon
You don't get it. Spending is unlikely to return to its previous level. Run any retirement calculator and you'll realize this. I just put in a "typical person" who starts saving at 30 (probably younger than most), and wants just 75% of his pre-retirement income replaced. That guy needs to save 10.8% of his income even assuming 8% growth in his investments.
In other words, 3.x% is still ridiculously low. As boomers retire, many will have to slash their spending just to remain solvent. You cannot rely on spending to return to previous levels. Sorry, but it wasn't sustainable and it still isn't.
If people have to save more, which they do, your tax cuts will do nothing to boost spending. That means it is not a stimulus package, it's a tax cut package. I'm for lower taxes as much as the next guy, but in this case it is clearly a phony solution. On top of that, you complain incessantly about handing the bill off to our children (or even ourselves). I agree. Please, please explain how a tax cut isn't just passing a bill off. From that perspective, an $800B tax break is every bit as bad as an $800B stimulus package. Oh, except for one thing; once you cut taxes people are loathe for them to go back up. It's much harder to reinstantiate tax cuts than it is to cut funding to a temporary program.
Gawd I hope so.