Making Payroll

One of the key objectives of any business, large or small, is "making payroll". In concept, it is extremely simple. Making payroll simply means having enough funds available to pay all your employees after having paid all other expenses and taxes. If there aren't enough funds to pay everybody, some worker or workers will have to go. Whenever making payroll is already tight, the business can't afford to hire any new employees.

Right now, it is "making payroll" that is behind the loss of jobs and the high rate of unemployment. It is also why business aren't hiring. All that business owners can see ahead of them is higher expenses and higher taxes that might make them less capable of "making payroll" in the future.

Business owners see is that their own state legislatures are raising taxes in order to fight rising state deficits. They see the advantage of the Bush Tax Cuts being ripped away from them next year. These see themselves being forced to provide health care benefits to all their employees or pay an 8% payroll tax penalty under the current health care reforms that are in Congress. They see high energy related expenses and also see themselves being forced to buy carbon credits if Cap and Trade is passed or if the EPA imposes carbon-controlling fines. They could also see unionization of their workforce if Card Check passes and they wind up having to pay their employees higher union wages and benefits.

All these factors weigh on their ability to make payroll.

What Obama and his naive academic economic advisers don't seem to understand is that business won't hire unless they can be assured that they can continue to make payroll. Giving a business a silly $5,000 tax credit to entice them to hire new employees is just political B.S. and stupidity when, in fact, those same businesses could be looking at many more times that number in increased taxes and expenses due to Obama's planned legislation.

If Obama really wants to create jobs, he should scrap health care reform and Cap and Trade. He should guarantee that the Bush Tax Cuts stay in place for at least another 5 years. Then, and only then, will business start hiring again.