Payroll-Tax Rise Blamed For Job Weakness
The $85 billion across-the-board Sequester cuts were initially thought to increase unemployment but an article published today in the Wall Street Journal offers a contradictory view. The recent increase in payroll tax is to be blamed for the dismal amount of jobs created within the economy last month; the retail sector lost 24,000 jobs alone in March due to a decrease in spending by consumers. Social Security payroll tax was increased from 4.2% to 6.2% as part of a fiscal-cliff deal by Congress in January.
This article correlates the increase in payroll tax to the job market but also acknowledges that the Sequester will take some time to show up in official data. Government furloughs have yet to begin in full force but will not cause the disappearance of most jobs. The budget cuts may have spooked private businesses however, leading many to cease their hiring and fueling speculation that average monthly job growth will remain below 100,000 in the second quarter.
The Wall Street Journal