Job creationism

Oregonians need more jobs like OPB needs telethons. Gov. Ted Kulongoski’s personal telethon has been his promotion of the Emergency Jobs Program, aimed at “creating” 12,000 jobs.

I say “creating” because what the governor says is creating is not what is usually called creating. It is not a creator at all. It’s more like a thief who does your yard work—you’re not quite sure how to thank him.

The program will take $90 million for 12,000 unemployed people, some of whom are on unemployment benefit roles, and provide summer jobs doing things like clearing brush and aiding local food banks.

But the EJP might not even pay the unemployed any more than they already receive through unemployment benefits (and in come cases less) and they can start to receive benefits again after the summer.

So why would someone even take the summer job when they make as much staying at home? Isn’t the point of receiving unemployment benefits to carry you over while you look for other work?

The program can’t be aimed purely at replacing unemployment benefits for a time. It’s about the government “creating” new jobs from whole cloth—jobs for college students and those just graduating. We are the target demographic.

Kulongoski said as much, as the program “also is aimed at youths graduating from high school that may need money for college or to help with household bills,” reports Harry Esteve of The Oregonian.
 
Not that it’s some conspiracy by Kulongoski and Oregon democrats to increase dependency on the state. They really think this stuff works to stimulate an economy and will give people what they want: jobs.

According to the governor’s page at oregon.gov, “by law, the number of state employees is subject to a cap based on the state’s population,” equal to 1.5 percent of the previous year’s population.

Oregon’s cap is at about 56,000 people this year. The Emergency Jobs Program is basically allowing a free 20 percent addition to that number with the extra 12,000.

The Portland Business Journal reports that at least 81,000 people “are seeking entry-level jobs, according to the state’s research.”

Assuming that all $90 million is received by the chosen 12,000, it only averages out to $7,500 per person.

If paying for 12,000 people to have summer jobs will stimulate the economy, why wouldn’t borrowing or transferring enough cash to hire all 81,000 stimulate the economy that much more? If the logic works small scale, shouldn’t it work on the large scale?

Moving 12,000 people receiving unemployment benefits to jobs clearing brush and doing heavy lifting at the Oregon Food Bank is akin to trying new toothpaste—it feels fresher but won’t substitute for adding flossing to the mix.

That’s what these jobs are, new toothpaste. Some of the jobs will be nice to have done; clearing brush in Oregon forests—potential fuel for forest fires—has obvious benefits. But why not just allow the logging that would stimulate growth in Oregon’s great industry and prevent the fires at the same time?

To be sure, we ought to praise the governor for saying at the Portland City Club, “Oregon state government can no longer be all things to all people.” But it’s hard to see how the Emergency Jobs Program fits the bill.

So why all the fuss? David Sarasohn writes, “The issue, the governor nearly bellowed, wasn’t about his leadership but about jobs for Oregonians, which he was directly trying to do something about with a new program for 12,000 summer jobs.”

The governor is not creating jobs. He is giving people work to do. No, it’s not “make-work,” as the governor made sure to clarify.

But real jobs are subject to real things such as supply and demand, and taxes.

If the priority is in fact real (productive jobs), then why not cut taxes? While at the Portland City Club, the governor only outlined plans to increase corporate minimum taxes.

And Oregon democrats want to trade Oregon’s relatively favorable 6.6 percent flat corporate income tax rate for an 8.2 percent rate on profits over a quarter million dollars. And, Esteve also reports, there would be a “gross receipts” tax of 0.15 percent on all corporate income above $500,000.

This tax will affect those two-thirds of Oregon businesses whose sales are mostly outside Oregon, so they will pay taxes inside and outside of the state.

Can somebody explain how this has anything to do with creating jobs? More income-earning jobs are the best source of tax revenue.

If we really want to create jobs in the state, why not take bold action and cut the corporate income tax rate in the state? Texas has none, apart from its gross receipts and property taxes, and has seen far less job loss.

Let’s give businesses the freedom to invest their own earnings, and in the process they can hire more employees. Let’s also cut the minimum wage.

It’s the kind of boldness needed to stimulate growth and reduce dependency on the state in all its forms. It’s the best way that the state can “look out for [its] most vulnerable citizens,” a worthy goal espoused by Kulongoski. But the Emergency Jobs Program isn’t the way.