Reducing the marginal cost...of hiring a worker

Obama to Seek $33 Billion in Tax Credits for Small Businesses - Bloomberg.com: "President Barack Obama plans to announce details today of a $33 billion package of incentives for small businesses to encourage hiring and wage increases as he refocuses on economic concerns in an election year.
The proposal, which the president is seeking as part of a jobs bill in Congress, would give businesses a $5,000 tax credit for each new hire this year and reimburse the 6.2 percent Social Security tax for wage increases beyond inflation. Obama said the measures will help 1 million small businesses add employees or raise pay.... The tax provisions being announced today would be capped at $500,000 to ensure that small businesses receive the bulk of the credits. Companies that reduce their payrolls in 2010 would be ineligible for both the hiring credit and wage bonus, according to an administration fact sheet...."

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This plan reduces the marginal cost of a worker in the first year, assuming that the credit is for one year. Since wage increases are minimal, the SS tax reimbursement may be of negligible benefit. The question that remains- are there employers that are looking to hire workers at a price point of $x but not at $x+5 ( x is in '000)? This perk sounds attractive if the employer provides no "overhead" benefits like health insurance or retirement plans, and when x is small. Further, what happens at the end of the year, when the benefit runs out? The assumption is that the worker if hired now would be cheaper than if he is hired a year later, and perhaps would be more productive by that time. At the core, the hiring issue still depends on demand, and on what labor is required to meet the demand. The incremental cost of labor has to come down dramatically for the equation to change in a significant manner.