American Business Will Not Hire Back the Unemployed

Thu Jul 01, 2010 8:13 am
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American Manufacturing will not hire back those that have been furloughed or layed off. Why? It is more profitable to give current employees overtime than it is to hire extra people. Fundamentally it is cheaper for business to pay overtime at a time & a half rate instead of having to deal with the costs of new hires.

Uncertain decisions in what Congress may do with payroll taxes as well as other tax increases makes it logically more economical for any business to pay current employees overtime and not have to deal with additional salaries, benefits and other typical problems with an increased labor force.

Look for this to be the case for the long term, probably a seismic shift in how managers will think about employment long term.


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