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Post Leadership
Posted at 12:15 PM ET, 09/09/2011

President Obama’s job speech and the $4,000 question mark


President Barack Obama’s job speech, delivered Thursday night to a joint session of Congress, contained an incentive for employers to hire those who have been unemployed for more than six months. (KEVIN LAMARQUE - AP)
When analyzing the president’s jobs speech, most people will comment on Obama’s fiery tone and impassioned delivery — a welcome if unexpected turn of events for those who are weary of his concessions. Others will comment on its heavy dose of tax cuts and how that still probably won’t be enough to make Republicans happy. The most attention is likely to be given to the big-ticket ideas: $240 billion in employee and employer payroll tax cuts, $50 billion in infrastructure projects, $35 billion to retain and rehire teachers and first responders, and $30 billion to modernize school buildings.

But there is one interesting smaller line item that could get less attention. The president has allocated $8 billion to pay employers up to $4,000 for hiring workers who have been looking for a job for over six months. It’s not clear whether that is $4,000 for each out-of-work employee hired, or $4,000 total for hiring anyone who’s been unemployed for the long term.

Even if it is paid out for each employee hired, I wonder how much employers will use it. In manufacturing or construction jobs where skills are more standardized, the credit could have a real impact. But in many professional jobs, I doubt it will. For one, $4,000 likely isn’t enough to sway many companies to hire a manager or engineer they don’t think is the absolute best person for the job. With talent increasingly becoming a competitive advantage, the cost of hiring the wrong sales executive or operations supervisor for a job over the long term is much higher than $4,000.

In addition, the premise of the idea asks corporate leaders to fight years of ingrained nervousness about hiring the unemployed.  Companies aren’t just cautious about hiring people who haven’t had a job in a few months — in some cases, they’re explicitly against it. Last spring, the National Employment Law Project found more than 150 ads on job boards that excluded applicants based on their employment status. Right or wrong, the reticence about hiring someone who’s been unemployed for many months is so deeply embedded in corporate human resources departments that it’s sure to be hard to shake.

I also wonder how such a credit will stand up to potential bias challenges. I’d bet it won’t be long before someone who’s employed or has been out of work for a short period says they’ve been discriminated against when applying for a job against someone who’s been unemployed for a year. How quickly the tables are turned.

The idea is a noble one. There’s no doubt we need to do something to change the ridiculous mindset in Corporate America that it’s a bad idea to hire someone who’s not already employed. And in this economy, trying anything to see if it sticks is a good idea. Still, I’d guess the tax credit will do little to get long-term unemployed professionals back to work. The war for truly good talent is still competitive enough that, at least when it comes to critical professional roles, business leaders are still going to look for the absolute best talent — no matter what their job status might be, and no matter how much they get paid in return.

More from On Leadership:

Paul O’Neill: Only the president can restart America’s engine

Michael Useem: Revising investor capitalism’s mantra

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By  |  12:15 PM ET, 09/09/2011

 
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