Approximately 260,000 unemployed workers in Illinois are eligible for employment under the HIRE Act, according to a state-by-state breakdown released today by the Treasury Department, placing Illinois fifth in the nation for states with the largest number of workers whose employers could qualify for HIRE act tax exemptions and tax credits.
The Hiring Incentives to Restore Employment Act of 2010 was signed into law this March to provide employers in the private sector with an incentive to hire workers who have been unemployed for 60 days or longer by exempting wages paid to those workers from employers’ 6.2 percent contribution of Social Security payroll taxes for the rest of the year.
In addition, employers can claim a tax credit of up to $1,000 for each new hire retained for a year. Social Security will be “made whole,” by a transfer from general revenue, the Treasury Department said.
In real dollars, that means an employer would receive about $3,500 in tax savings for an employee making $40,000 for a year or more, according to the Treasury Department.
Nationwide, from February to June, the Treasury Department is estimating that about 5.6 million workers who had been unemployed for eight weeks or longer were hired by private sector employers who were eligible for the exemption. The Treasury Department is estimating the potential tax savings for those hires to be $10.4 billion, but does not yet have actual figures for employers who have applied for the exemption.
Those numbers will not be available until after 2011 tax returns are filed. The estimates – which are based on a monthly survey conducted by the Bureau of Labor Statistics – are also based on gross hiring numbers, and do not take into account layoffs and other workers leaving the workforce.
Assistant Secretary for Economic Policy and Chief Economist Alan Krueger said the most hires are coming out of the construction trades, which had high layoffs during the recession and is also prone to additional hiring during the spring and summer months. Sector breakdowns by state are not available.
jwernau@tribune.com
