Getting the Jobs Agenda Right

At WashACE, we're pro-job. Not a bold stance, I recognize. With state unemployment at 9.5 percent, I reckon everyone is pro-job. Nationally, we've seen the conversation shift - I think 'pivot' is the term of art - from health care to jobs. Particularly middle-class jobs. Particularly if they're in small businesses.

I'm not sure if unemployed workers are that picky about where they're next job comes from a small business or a large one. And, of course, a lot of small businesses exist primarily as corporate suppliers or service businesses that depend on the customer base provided by major regional employers. But, quibbles aside, it's good to see jobs back at the top of the legislative agendas here and in D.C.

Last week, Wenatchee World editorial page editor Tracy Warner wrote a good column on government's role in job creation.

I wish government could create jobs at will. A vote, a law, the stroke of a pen, and there you have it — tens of thousands of people returned to gainful employment. If that is not the way it actually works, sometimes that’s what they want us to think. If only it could.

After noting the particularly tough employment conditions today, Warner notes:

If government could create productive jobs at will it would do a lot more of it. More often, the taxing-and-hiring schemes cost more jobs than they create. If these plans worked we could be happily employed filling in holes government hired people to dig. But, if government can’t create jobs itself, it can create the conditions and help supply the means for private business to create jobs, the kind of jobs that produce more wealth than they consume. It’s been done.

Surveying the landscape of current legislative proposals he identifies some good and not-so-good ideas.

Gov. Gregoire wants tax credits for small businesses hiring new employees. She wants tax incentives for private investment. She wants streamlined permitting and regulation. This will lower the government-added cost of hiring. Make hiring new employees less expensive and you increase the odds people will do it.

Senate Democrats today endorsed the governor's tax break. (Link is to Publicola; not yet up on Senate site.) UPDATE: LInk on Senate site here.

Warner's skeptical of some other ideas.

The “green jobs” gambit, the idea that government can create an entirely new industry by subsidizing uneconomical forms of energy production, has not worked elsewhere and won’t work here.

...Other plans have little more promise. Adding $860 million to the state’s debt load to pay people to insulate schools is unlikely to have as much positive impact as promoters contend. It will save $190 million a year in energy costs, they say, but with energy prices so low in this state, large returns are not easily found. And borrowing such sums is problematical.

I share his skepticism. And I'm a little less confident in the small business tax break. People hire when it makes sense to hire from a business perspective. But it might help. Of more help would be action to reform workers' compensation and mitigate the extraordinary unemployment insurance tax increases that just hit employers here.

Warner's conclusion sums it up well.

The old-fashioned, less photogenic means of government job creation still work. Build on our infrastructure — transportation, energy, education, basic research. Do all to remain fiscally sound and minimize risk. Keep taxes on employment low and predictable. Do that first.

Do that. And don't do this.