May 9, 2010

Few hired in first six weeks of jobs tax credit

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By Erich Wagner
Erich@MarylandReporter.com

Since the signing of the Gov. Martin O’Malley’s law rewarding companies for hiring people off the unemployment rolls six weeks ago, companies have hired 64 new employees using the new tax credit.

But business owners say the credit is only one factor in the decision to begin hiring again. The driving force is still having enough business to warrant a new hire.

The credit provides companies with $5,000 per person hired, and with $20 million budgeted for the program, a total of 4,000 people can be hired this year that qualify for the rebate.

Martin Groff, owner of Martin Groff Construction Company, said the recession had forced him to lay off a number of workers. He said the credit, which is available until the end of the year, “was a nice incentive” to hire more workers, but wasn’t his sole motivation.

“I was at the point where I was beginning to get enough business to bring people back on board,” Groff said. “So I brought a couple people back so I would have a crew to work on some of these jobs. There was no way to hire people just so I could take a tax credit–the cost to hire them compared to the money from [the tax credit] is so skewed.”

And Jeff Hill, general manager of Rosedale Cycle World, said the tax credit influenced his business’ decision to hire new workers, but business hasn’t improved for him yet.

“Business is the same everywhere right now,” Hill said. “We’ve always tried to keep people here, but we probably have more people than we have work for.”

Bernie Kohn, spokesman for the state Department of Labor, Licensing and Regulation, said he thinks more businesses will use the credit as the state begins to promote it more. His agency and the governor’s office have been advertising the credit to employers in the state, and will be ratcheting up the effort in the coming months.

“The governor will be making more appearances around the state to market it,” Kohn said. “And there’s increased marketing being done by DLLR and [the Department of Business and Economic Development] at job fairs, marketing the credit with employees as well, talking with people who are unemployed, telling them how to use the credit to market themselves in an interview situation.”

Sen. David Brinkley, R-Frederick, said that any instance where people are getting back to work is “great,” but he is skeptical the tax credit is having much effect on people’s decisions to hire new workers.

“[When we were considering the bill], we had some business people saying, ‘We’ll take it, but we just want the work,'” Brinkley said. “‘If we have the work we’ll hire people anyway.It’s good news any time you get someone back on payrolls, but we just want expanded opportunities for everybody.”

Groff said he would “definitely” use the tax credit again if business picks up later in the year, provided there’s any money left in the program. He said the relatively small amount of firms that have used the credit may say something about the economy.

“I guess just not that many people have been able to hire people. I guess that tells you where business is in the state of Maryland. It’s sad.”