The Hill News

Congress is considering a tax credit or reduction in employer Social Security payments to stimulate hiring of unemployed workers. Unfortunately, the proponents of these programs show a fundamental lack of understanding of why companies increase employment.

Jobs are a byproduct of increased sales and revenues. Capitalist companies do not hire workers merely to employ a larger workforce. This might happen in socialist economies, but certainly not capitalist economies.

In a modern capitalist economy, employees are expensive, require management and cannot be easily laid off in the event of incompetence or loss of business. Companies only increase employment because they have additional business that needs to be processed.

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