mrswdk wrote:Cutting payroll tax creates one job per $220,000 spent to make the cut? Isn't that a huge waste of money for everyone involved?
Correction: "
$80,000-$133,000 per job created for cutting employers’ payroll taxes"
In other words, why do payroll cuts seem 'so expensive'?
That's the wrong question because the payroll cuts can basically be transformed into three types: production, savings/investment, servicing debt, and each has different effects on how its measured in dollars per job (i.e. labor-hours or labor-years). My main point is that the money not confiscated by government doesn't
all go directly into employee salaries (thus boosting the observed dollars per labor-hours measurement), and some of these effects from the different allocations of that money are probably not measured at all or are insufficiently measured.
Production:Some of the money can go into production, where the money directly goes into labor-hours, thus reflecting into the results you see in the article. However, some portion which goes into production is spent on capital (a.k.a. capital investments), and this can create a higher demand for labor and capital in the capital-producing industries. Nevertheless, this 'ripple effect' may go unobserved in the study (I'm not sure if the study incorporated this effect, and how well they did it).
Savings/Investment:
The other portion goes into savings--e.g. businesses sitting on liquid assets (cash), which will be put into later production, which well then be reflected in greater labor hours per dollar
but at a later time. This effect goes beyond the scope of the study; it's an unobserved yet real effect.
Also, some portion can accrue interest if that cash is invested in stocks, bonds, etc., and usually 'one person's savings is another's consumption/buying,' so for example buying a USG bond supplies the USG with money which it then spends. And, the interest earned is a profit that can be spent on more labor and capital
at some later time. In turn, you should see some increase in dollars per labor-hour due to the purchases of USG debt because of deficit spending, but I'm not sure how or if this study incorporated this effect.
Many studies simply say, "oh USG deficit spending created jobs," and "oh, multiplier effect! More jobs!," but they're overlooking the long-term costs of incurring debt, and they're overlooking the process which supplied that money in the first place (from those businesses and foreign governments buying that debt). Measuring all of this can be difficult, and some of it is perhaps impossible to do.
Servicing DebtThe remainder or perhaps all of the payroll cut can go into servicing debt, so none of it will be reflected in contributing positively to dollars per labor-hours. If this effect is incorporated in the study, then it seems as if the payroll cut is inefficient, but that would be a mistaken conclusion since that money is keeping the business afloat (thus preserving those jobs). To make matters more complicated, servicing the debt which keeps the company running also acts positively toward dollars per labor-hour since those jobs may have otherwise been lost.
Yeah sorry not every part in every car is perfect. as you damn well know but have surely completely discounted in your "rational" thought, every car has 1 certain thing that is bad about it. I am laughing at you calling out the chevy truck on its transmission, nothing more! TA!
