Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

High Unemployment Means More Job-Killing Taxes

Economics / Unemployment Oct 05, 2011 - 01:56 PM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleKerri Shannon writes: The unemployment problem in this country has gotten so bad it's starting to sustain itself.

Essentially, high rates of unemployment have led to tax increases that are further suppressing hiring - thus making an already-ugly unemployment problem even worse.

That's bad news for thousands of prospective employers and millions of Americans.

Paying for the Unemployed
Sept. 30 was the deadline for states to pay more than $1 billion in interest payments for loans used to cover unemployment benefits. It was the first time since the start of the economic downturn that states had to pay interest on federal borrowing.

And many states were forced to raise unemployment taxes to cope with the extra burden.

Employers in 2010 paid 27.8% more in state jobless taxes than they did in 2009. Employers in 24 states will have to pay between $21 and $63 more per employee following another tax hike in January 2012.

"Unemployment taxes, which were a relatively low bottom-line cost in 2008, are now becoming a significant cost," Doug Holmes, president of UWC - Strategic Services on Unemployment & Workers' Compensation, told CNNMoney. "It discourages companies from electing to hire new employees."

The extra expenses hit small businesses especially hard.

"We try not to hire because we will be socked by a bigger tax bill for unemployment insurance," Margery Keskin, an executive at four small construction-related companies in New York, told CNNMoney. Keskin said she's had to take money from bonuses and profit-sharing plans to pay higher unemployment taxes.

Job Cuts Ahead
These additional costs are just the latest obstacles hitting the dismal U.S. jobs environment. While businesses are already uninterested in hiring new workers, the added expenses paired with the weak economic outlook will lead some companies to trim their workforce.

A quarterly survey released last week by the Business Roundtable found 24% of chief executive officers (CEOs) expect to cut U.S. jobs over the next six months, up from 11% in the second quarter.

The executives cited weaker growth and revenue projections as reasons to pull back on hiring. Just 65% of executives expected sales to rise over the next six months, down from 87% in the second quarter, and only 32% planned to boost capital spending this year down to from 61% in the prior quarter.

Executives also lowered their U.S. growth forecast to 1.8% this year, down from their earlier estimate of 2.8%.

A number of companies and industries have already announced layoffs this year.

Deutsche Bank AG (NYSE: DB) just this week announced it was cutting 500 jobs over the next six months, reducing its headcount by 11% through 2012. Bank of America Corp. (NYSE: BAC) already announced plans to cut 6,000 jobs this year, and will eliminate a total of 30,000 positions through 2014. And the American Hospital Association said last week that a 2% cut in Medicare could lead to 195,000 job cuts by 2021.

U.S. Federal Reserve Chairman Ben Bernanke, who last week called unemployment a "national crisis," said yesterday (Tuesday) in testimony to Congress that economic data shows no hint of employment improvement. He urged Congress and the White House to take more action to create job growth, but so far Washington has failed to deliver any promising proposals.

Waiting on Washington
Meanwhile, Republicans and Democrats are still battling over the best ways to create jobs, but have done nothing more than stall progress.

Under pressure to act, U.S. President Barack Obama last month proposed a $447 billion jobs plan, but Republicans will likely shoot down many provisions in the proposal. Even if passed intact, the plan would only reduce the unemployment rate by one percentage point over the next year.

Republicans blame overregulation for killing employment. House majority leader Eric Cantor, R-VA, on Aug. 29 sent a memo to other Congress members asking them to favor the repeal of regulations that inhibit job growth.

"By pursuing a steady repeal of job-destroying regulations, we can help lift the cloud of uncertainty hanging over small and large employers alike, empowering them to hire more workers," the memo said.

But there's little evidence showing that eliminating these regulations would significantly dent unemployment as long as the economic growth outlook remains weak. A July survey of business economists by The Wall Street Journal found that "the main reason U.S. companies are reluctant to step up hiring is scant demand, rather than uncertainty over government policies."

The unemployment rate has remained near 9% since April 2009. It's expected to remain at 9.1% for September when the U.S. Labor Department releases the nonfarm payroll report Friday.

Source :

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in