HIRE Act: Overview
The Hiring Incentives to Restore Employment (HIRE) Act, enacted in 2010, was a significant federal legislative response to the economic downturn that began in 2008 and led to historically high unemployment rates. At its peak, the unemployment rate reached 9.6 percent in 2010, prompting the need for substantial government intervention to support job creation and assist those affected by long-term unemployment. The HIRE Act aimed to incentivize employers to hire unemployed individuals by offering payroll tax exemptions and tax credits for retaining these workers for at least one year.
In addition to creating job incentives, the HIRE Act was part of a broader range of legislative efforts, including the Emergency Unemployment Compensation program and the American Recovery and Reinvestment Act, which provided extended unemployment benefits and health insurance subsidies. These measures sought to mitigate the effects of the recession on individuals and families, particularly those who had been unemployed for long periods. Despite temporary improvements in unemployment rates over the following years, disparities persisted among different demographic groups, highlighting ongoing challenges within the labor market. The HIRE Act represents a vital chapter in the U.S. government’s efforts to foster economic recovery and address the complexities of unemployment during a turbulent economic period.
HIRE Act: Overview.
Introduction
Beginning in 2008, an economic downturn led to the elimination of many jobs across all sectors. While the historical data available from the United States Bureau of Labor Statistics shows that the national unemployment rate can vary significantly from month to month and year to year, there have only been a few spikes as significant as the one produced by that downturn. In more than seventy years of historical data, the unemployment rate in 2009 and 2010 (9.3 and 9.6 percent, respectively) was matched or surpassed only in 1982 (9.7 percent) and 1983 (9.6 percent). The economy recovered slowly, with the annual unemployment rate still at 7.4 percent in 2013—higher than any year between 1993 and 2008. The federal government enacted a number of significant legislative efforts to help individuals make ends meet while they searched for new employment or received new job training. One of the most prominent of these was the 2010 Hiring Incentives to Restore Employment (HIRE) Act.
Understanding the Discussion
COBRA: An acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985, most frequently used to refer to one of its component programs, in which a person who leaves his or her job can continue to receive the same health-insurance package he or she had been receiving while employed if he or she pays the premiums out of his or her own pocket.
Laid off: When an individual has been asked to leave the employment of a company but was not fired for doing something wrong.
Long-term unemployed: Someone who has been unemployed for twenty-seven weeks or longer.
Unemployed: For statistics-gathering purposes, a person who is not working but is actively looking for work.
Unemployment benefits: A system in which people who are no longer employed can collect some portion of their previous weekly wages for a particular period of time to fill the gap until they obtain a new job. People who were fired from their previous jobs for good cause are usually not eligible for unemployment benefits.
History
The US government tracks the nation’s unemployment rate via the monthly Current Population Survey (CPS), which was first conducted by the Work Projects Administration in 1940 and was taken over by the US Census Bureau in 1942. Subsequently, the unemployment rate generally remained below 6 percent (save for in 1958 and 1961) until 1975, when it shot up from 5.6 percent the previous year to 8.5 percent.
Since 2008, the federal government has enacted a number of significant legislative efforts to help individuals make ends meet while they search for new employment or receive new job training. One of the first such programs was the Emergency Unemployment Compensation (EUC) program, which started in mid-2008. Prior to 2008, unemployment benefits were typically paid to workers for about twenty-six weeks following a layoff, and the amount paid was a certain percentage of the worker’s previous salary, subject to a cap. However, as a result of the economic downturn, a significant percentage of individuals found themselves out of a job for twenty-seven weeks or more. The EUC program temporarily extended unemployment benefits, using a complex system of tiers of eligibility to determine how long an individual would be allowed to receive benefits.
The federal government also instituted the American Recovery and Reinvestment Act of 2009 (ARRA). In addition to providing additional employment payments beyond those authorized by the EUC, the ARRA provided for a subsidy of 65 percent for fifteen months for individuals to cover the cost of health-insurance premiums under the Consolidated Omnibus Budget Reconciliation Act, or COBRA. The COBRA program, which was established in 1985, allows no-longer-employed workers to continue purchasing the same health-insurance coverage they received while employed. However, individuals must pay the premiums out of pocket, which can be prohibitively expensive, especially for someone who is unemployed. The subsidy provided by ARRA allowed unemployed workers to continue their health-insurance coverage while they looked for a new job and compensated the coverage providers for the reduced premiums by providing tax credits.
During the economic recession that began in 2008, unemployment peaked in 2010 at 9.6 percent, which represented about 14.8 million people. The number of long-term unemployed Americans was about 6.8 million, or about 46 percent of all unemployed individuals. By the end of 2013, the overall unemployment rate had dropped to 7.4 percent, or about 11.5 million people, with about 4.3 million of those—approximately 38 percent—unemployed for twenty-seven weeks or longer. In addition, monthly CPS data showed a further drop in unemployment for 2014, with rates ranging from a high of 6.7 percent at the beginning of the year to a low of 5.8 percent by the end.
Despite the legislative programs designed to provide subsidies, cash payments, and tax breaks to unemployed individuals, a more comprehensive solution was still needed. In March 2010, the federal government passed a significant job bill, at an estimated cost of $17.6 billion, to help aid economic recovery. Provisions of this bill included exemption from payroll taxes for companies that hire unemployed individuals through the end of 2010 and a $1,000 tax credit for retaining such a worker for at least one year. The bill also extended the federal highway construction program and redirected funding to projects designed to improve public infrastructure, such as roads and bridges. The hope was that this shift would create more jobs in the construction sector, whose recovery was lagging behind other sectors. While the unemployment rate in the construction industry in 2013 was 11.3 percent, well above the overall national rate, it was nevertheless greatly reduced from 20.6 percent unemployment rate seen in 2010.
HIRE Act Today
In 2010, Congress passed the Unemployment Compensation Extension Act, which extended filing deadlines for many of the emergency benefits created in the previous two years, and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act, which further extended those benefits and introduced a one-year payroll-tax reduction, among other provisions. Subsequent legislation continued to extend those benefits until the end of December 2013, when the EUC program and a similar program, the Extended Benefits program, both expired and Republicans in both houses of Congress blocked efforts to renew them. The administration of President Barack Obama promised in October 2014 that it would continue to attempt to extend emergency unemployment benefits, but by January 2015, this had yet to be accomplished.
Nevertheless, by early 2015, the outlook for economic recovery was generally optimistic. According to the Bureau of Labor Statistics, the unemployment rate in November 2014 was 5.8 percent, down 1.2 percentage points from the previous November. Industries that showed significant growth included professional and business services, retail trade, health care, and manufacturing. Food services, financial activities, construction, and transportation and warehousing also saw increased employment. The unemployment rate for minorities was higher than the national average: 6.6 percent among Hispanics and Latinos and 11.1 percent among African Americans. Unemployment rates among men and women remained relatively equal, with women at 5.8 percent and men at 5.9 percent.
By April 2018, the overall unemployment rate was 3.9 percent, the lowest level since 2000 and one of the lowest levels in seventy years. The long-term unemployed numbered 1.3 million, or 20 percent of all unemployed individuals, while those “marginally attached to the labor force” (meaning they are unemployed and had sought work within the last year, but are not looking) was 1.4 million. Some, including President Donald Trump, celebrated such figures as proof of a strong labor market and improving economy. Others noted, however, that overall workforce participation had fallen and that racial disparities in unemployment persisted, with rates of 2.8 percent among Asian Americans and 3.6 percent among whites but 4.8 percent among Hispanics and Latinos and 6.6 percent among African Americans. Moreover, wages had not grown to the extent that economists anticipated in light of the drop in unemployment. Debate surrounded what factors, such as discouraged jobless people seeking employment anew or younger workers replacing increasing numbers of retirees, might account for the lack of significant wage growth.
Despite the tremendous negative impact of the COVID-19 pandemic in 2020, the employment effects proved short lived. The annual unemployment rate that year was 8.1 percent and quickly fell to 5.3 percent the following year and 3.6 percent in 2022 and 2023.
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