By Martin C. Daks
Originally Published in NJ Biz - September 9, 2011
President Barack Obama pitched his American Jobs Act to Congress last night, and New Jersey business leaders had a range of reactions to the proposed legislation — from qualified approval to outright rejection.
"There are certainly several provisions we wholeheartedly supported," said John Holub, president of the New Jersey Retail Merchants Association. "The expanded employee payroll tax reduction and its expansion to the employers' share, and the extension of unemployment and the proposed hiring tax credit all amount to a good first step. But the speech did not address some other issues that are important to retailers, like expanded free trade agreements to open up more trade opportunities."
Among other measures, Obama would establish a $10 billion "national infrastructure bank" to leverage private and public capital, and to invest in a range of national and regional infrastructure projects. The proposed legislation would also cut employer payroll taxes in half for the first $5 million of payroll, while eliminating payroll taxes for firms that increase their payroll by adding new workers or increasing wages for current workers, subject to certain conditions. The president also proposed a tax credit of up to $4,000 for hiring workers who have been looking for a job for over six months.
It was "a mixed bag," said New Jersey Business & Industry Association President Philip Kirschner.
"The broadened payroll tax cuts are important, since they free up capital to invest in jobs and equipment," he said. "But the hiring tax credit is much too low, and restricting it to people who have been unemployed for six months or more is very unattractive to business owners, who need the best people, regardless of their employment status. So that's a nonstarter."
The Obama plan is designed for short-term solutions, while a comprehensive approach could "likely take a generation to implement," said John Sarno, president of the Employers Association of New Jersey.
"Some jobs are open but can't be easily filled, because of a big gap in skills," he said. "I'm glad the president mentioned it (along with a government-sponsored training program), but it needs more focus. Also, tax breaks for new hires looks good in the classroom and on paper, but experience with previous programs shows that they've only resulted in minimal job creation."
But "the government shouldn't be trying to create jobs … the government should be helping create an environment where the economy creates the demand for more jobs," said Frank Wyckoff, president of Snelling Staffing Services — The Wyckoff Group. "Let the market drive demand and the demand will drive the need for more jobs."
Reducing taxes or giving incentives to hire people "won't help if our customers aren't ordering our products or services," he added. "We need to increase demand. We do that by giving customers and consumers confidence in the economy and what's coming down the pike."