With the risk of another recession, businesses have been hesitating to hire. The unemployment rate was 9.1 percent for a third straight month in August. Even with the return of state government workers in Minnesota increasing payroll, the results were not repeated in September. The U.S. economy provided 103,000 new jobs in September, however, economists estimate it will take at least 100,000 new jobs every month to decrease the unemployment rate.
This is why the payroll tax holiday has been extended. Obama implemented the extension so businesses can add new workers, or raise salaries for existing employees. Businesses will have this privilege if they increase their payrolls by $50 million from the previous year. According to U.S. economist, Mark Zandi, a key attribute of the payroll holiday is that it is straight-forward and will help businesses without complicated direct-assistance tax credits. The payroll tax will be reduced from 6.2 percent to 3.1 percent for 2012.
For further reading: Gain in Payroll , Zandi , Snap Analysis
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