David Kirkpatrick

November 24, 2009

Unemployment taxes an impediment to small business job creation

This is one of those chicken/egg scenarios, but states are hurting for revenue, unemployment remains high and small business are being dissuaded from hiring because those broke states are cranking up the unemployment taxes on those small businesses. The end result? Small businesses are going to put of taking on new employees right at a time when jobs are needed. There’s no great answer here, but I’m going out on a limb and the discussion needs to be begin in state capitals around the nation.

From the link:

Employers already are squeezed by tight credit, rising health care costs, wary consumers and a higher minimum wage. Now, the surging jobless rate is imposing another cost. It’s forcing higher state taxes on companies to pay for unemployment insurance claims.

Some employers say the extra costs make them less likely to hire. That could be a worrisome sign for the economic recovery, because small businesses create about 60 percent of new jobs. Other employers say they’ll cut or freeze pay.