Health, Climate bills job killers

Washington Times:

While President Obama and congressional leaders say they would like to do more to spur job creation, economists and business executives warn that their plans to impose new health care and climate-change costs on corporations would have the opposite effect.

The initiatives, according to this analysis, are likely to overwhelm any positive impact on jobs from stimulus measures by giving businesses a reason to keep laying people off.

The House's health care bill would raise the cost of hiring in a straightforward way: by charging businesses a new payroll tax of up to 8 percent if they do not provide health insurance to workers. The Senate plan would impose smaller fines on those same employers.

The House-passed climate-change legislation would not add directly to the cost of hiring, but would raise energy prices, which are a major cost of doing business. Economists say that many companies would react by hiring fewer people.

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But economists warn that lawmakers in the meantime are neglecting the impact on hiring decisions caused by their ambitious plans on health care and climate change.

The legislation has "perverse economic effects," said John Silvia, chief economist at Wells Fargo Securities. "Health care mandates will likely raise the cost of labor and thereby discourage hiring," while "cap-and-trade will likely increase the cost of energy and transportation for employers and thereby reduce any funds left to hire workers."

Labor costs -- including hiring new employees and giving them health benefits -- are the biggest cost for nearly every business, with energy costs not far behind. Even for employers who already provide health insurance to their workers and have striven to achieve energy savings to cut greenhouse-gas emissions, the uncertainty about what Congress will do "is more than offsetting any positive impact from the fiscal stimulus," Mr. Silvia said.

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Some industries are hurt more than others, but the negative effect on the economy as a whole is hard to ignore. Right now the uncertainty alone is enough to discourage hiring. Both bills impose a burden on the economy at a time when it does not need much more incentive to cut workers or not hire new ones.