“Businesses don’t hire because taxes are lower. That’s because taxes represent a relatively small part of the cost of hiring. And if taxes did make a difference then it would stand to reason that hiring would have been much lower under Bill Clinton’s presidency when rates were higher than they were under George W. Bush when taxes were slashed. Unfortunately, the truth is quite the opposite — under Clinton, companies hired nearly eight times more workers – 22.2 million — while Bush presided over the creation of 3 million jobs – the worst performance in the last 60 years. “
– Peter Cohan, Socialism today…aka Forbes Magazine
Wow. Businesses don’t automatically create jobs when you give them huge tax breaks?! My whole life perspective…shattered…
The paragraph above comes from that crazy crazy leftist Forbes magazine (what the fuck do they know about business, i know.) But their ultimate conclusion is even more interesting:
Companies hire only when not hiring means they can’t satisfy customer demand. Put another way, companies hire when the profits missed from not hiring exceed the cost of adding a new worker.
For those of you who have trouble following the bouncing ball let me paraphrase and simplify.
It’s the demand stupid.
Conservatives often claim that businesses must be given incentives to hire people. This is 90% false and 10% true. As with any rational actor, businesses, like people, respond to incentives. But the equivocation that conservatives make occurs when they confuse market based incentives with government incentives. Government incentives only save profit. Consumer demand creates profit. And if we want businesses to grow, IE hire more people, then we must cultivate a larger buyers market by financially empowering people and not big business.