The HIRE Act - Why Now is the Time to Hire

Now is the time to hire. Not just due to the economy picking up, or because of the vast number of unfortunate people that are unemployed. It’s time because there are government incentives now urging companies to hire the unemployed. We all know what that means- tax incentives.

The HIRE act was signed into law on March 18, 2010 as an attempt to help speed up the rate employers will be hiring candidates who are currently unemployed. While the unemployment rate may seem high, we all know the true unemployment rate is much higher as not everyone is on record as unemployed. It seems the federal government decided to take action much to the relief of many organizations that were debating bringing someone new on board in this questionable economy. 

A social security exemption is part of this new act, as long as the new employee was previously unemployed. How long must someone have been unemployed in order to qualify for the exemption? At least two months out of work is a necessary requirement. The exemption is a cushy 6.2 percent, making companies eager to bring on new employees as well as hire staffing agencies and contingency firms to make sure the candidates they bring on are the right fit… and will stick around.

In addition to the social security tax exemption, an income tax credit is available. This is referred to as the ‘retention credit’. The newly hired employee must remain with the organization for at least a year or this is no longer applicable, and the fifty-two weeks must be consecutive. This tax credit will be 6.2 percent of the newly hired employee’s wages up to a maximum amount of a thousand dollars. Replacement positions do not qualify. No firing and hiring here- new hires qualify only, with some exceptions to the rule.

The maximum amount a company can save is $6,622 per new hire- a pretty significant number. It is wise for a company to let their recruiters know that they are partial toward these benefits, so that the recruiter knows to have an eye out for the unemployed candidates currently on the market. 

The federal HIRE act may be working as it is supposed to. According to ADP Employer Services 42,000 jobs were added in July. Still, there is no hard evidence of acceleration in employment and with over 8.4 million jobs lost in this recession we still have a long way to go.