How will recent legislation affect the hiring landscape for small to midsize DM firms?
A fairly significant jobs bill made its way through Congress and was signed into law by President Barack Obama last month.The Hiring Incentives to Restore Employment Act, or HIRE, will help smaller employers in particular, and there are thousands of those in digital and direct marketing.
If you run a small shop and you're thinking about adding headcount, HIRE is worth a look. Check it carefully, however, because it's full of ifs, ands or buts.
First, the highlights. HIRE eliminates the current 6.2% employer Social Security tax for eligible new hires — that is, people hired after February 3. In order to be eligible, the new employee must certify that he or she has not been employed for more than 40 hours during a 60-day period before beginning work. The employee's wages cannot exceed $106,800.
In addition to the savings on Social Security taxes, there is a $1,000 income tax credit per qualifying worker. The worker must be on the job for 52 consecutive weeks, among other limitations.
The bill encourages employers to hire sooner than later. As an example, a $60,000 worker hired on April 1 would save an employer around $2,800 in taxes. Delaying the start date until June 1 would reduce savings by around $500. The quicker the person is on board, the better it is for a company's bottom line.
There are a couple of other noteworthy provisions. There appears to be no limit on the total amount of tax benefits that can be claimed by an employer, but the amount one can save per qualifying worker is capped at $6,622. Also, none of these tax savings apply if the person hired is replacing another employee, unless that employee left voluntarily or was dismissed for cause.
All in all, HIRE represents a nice boost for digital and direct marketing employers who need it most.