WASHINGTON, D.C. — Businesses have hired 4.5 million workers under a new program that provides tax breaks for hiring unemployed workers, the Treasury Department said Monday.
It is unclear, however, how many of those workers would have been added without the tax break.
President Barack Obama signed a law in March that exempts businesses hiring people who have been unemployed for at least 60 days from paying the 6.2 percent Social Security payroll tax through December. Employers get an additional $1,000 credit if new workers stay on the job a full year.
Treasury released a report Monday estimating that from February through May, businesses hired 4.5 million workers who qualify for the tax breaks. Those businesses are projected to save $8.5 billion in taxes.
Many businesses also cut jobs during the period, though there was a net increase of about 993,000 jobs from February through May, according to the government’s business payroll survey. The economy shed 125,000 jobs in June, according to the survey.
“The HIRE act is an example of a targeted timely tax policy designed to get employers to move their hiring up,” said Alan Krueger, assistant Treasury secretary. “If they’re sitting on the fence and not sure whether they want to expand or not, the HIRE Act hopefully gives them an incentive to get off the fence and do additional hiring.”
The report, however, does not estimate how many of those jobs would have been added without the tax break.
“At this point I’m not making an inference at all about how much hiring is resulting because of the HIRE Act or for other reasons,” Krueger said. “At this point the goal of the report is just to quantify how many people have been hired who would qualify.”
Nigel Gault, chief U.S. economist for IHS Global Insight, said, “Nobody knows how many of those 4.5 million would have been hired without the break.”
“The bottom line is we just don’t know,” Gault said. “It’s going to require a lot more evidence before we can make any confident statements about how much impact the tax credit had.”
The tax break expires at the end of the year, though Sen. Charles Schumer, D-N.Y., said he wants to extend it an additional six months.
“The immediate and targeted nature of this tax cut makes it easy to understand why this program is showing early signs of success,” said Schumer, a main sponsor of the original tax break in the Senate.