Why Won't Obama Just Create the Jobs?

The Washington Post’s Alec MacGillis asks a rather provocative question in Sunday’s Outlook section: “Why won’t Obama give you a job?” The article challenges the Administration’s claim that “the stimulus is working” and argues that the Administration could have done or be doing better for the American public in terms of job creation:

Since taking office, the Obama administration has studiously avoided paying people to go to work, which could be accomplished by subsidizing workers’ private-sector employment or by creating new government-paid jobs…

Instead Obama’s team has taken a more indirect approach, a prudence that critics on the left say is misplaced. If you’re spending hundreds of billions of dollars on stimulus, why not do it with conviction? Engaging in more forthright job creation could invite some political pitfalls (such as those constant accusations of socialism), but is double-digit unemployment any less a political risk?

I’m no expert on the labor market, but I suspect there are two main reasons why the Obama Administration has chosen a less aggressive, more indirect route to “job creation”:

1. It’s not clear whether the federally-created jobs would be sustainable or valuable. Alec does say that the Administration “opted against direct job programs not for political reasons but because they thought such efforts would not produce long-term value.” I think the more government gets in the business of creating jobs “out of thin air,” the less confident we can be that the jobs make “economic sense” in terms of our human resources being put to their highest and best uses as signaled by the price system (or any other social-value system where signals aren’t nearly as clear).
2. It’s not clear that just because the federal government pays for or subsidizes jobs or engages in any other policy labeled a “job creation program,” that they’re actually creating new jobs or changing employment outcomes much, versus handing out money for behavior that would have occurred anyway. Once the federal government gives lower-level governments or private businesses money to hire workers or not fire workers, there’s no guarantee that it actually makes a difference, and it’s impossible to verify in the data. It’s sort of on the “honor system.” Just like the Cash for Clunkers program, at least a good chunk of the money goes to people as a pure bonus, or windfall.

So I think for both those reasons, if the goal is true job creation, there’s no reason to believe that the federal government making up new jobs or subsidizing others to make up new jobs is any more successful in creating sustainable, valuable jobs than the other ways of injecting cash and stimulating aggregate demand in the economy. If the government simply hands out extra cash to seniors or first-time homebuyers (and even if they would have bought that first home anyway) and it translates into newly-created consumer spending almost dollar for dollar, isn’t that more likely to lead to a created or saved job than a job-creation subsidy to a company who simply uses it to reduce their net costs for the employees they were going to hire or retain anyway?

This whole issue of how to best stimulate the short-term economy is a big puzzle to me. When I hear the press pondering the question of “how many jobs have been created or saved” as a result of the recovery and reinvestment act (aka the “stimulus” bill passed in February), I always think: “how would we know?” It’s just like a lot of economic policy: we never have a perfectly controlled experiment. (My chemist parents would argue that that’s just one more reason why economics isn’t “real (hard) science”–it’s pseudo/soft science.)

Comments

[chris coonan:]

If Walmart takes over Target Stores as the rumor indicates...what will happen to jobs? I suspect there is a lot of overlap between the companies.....isn't Walmart America's largest employer?

This could be a big deal right now.

And the big question, will the Target bullseye replace the new Walmart logo....with a bullseye in front of the word Walmart, probably a powerful international brand. And Target isn't international...so I guess the play makes sence.

So the question is, do you buy/sell Target or Walmart stock now?

Nov 09 08:15 AM

[enigmaman:]

Its very simple: Creating jobs empowers people, fosters self thinking and independence which works against what this Admin is after, on the others hand, saving and or creating union jobs, as this stimulus bills has done fosters allegiance to the party, extending or providing additional funds to support social programs as this stimulus has done creates dependence on government for ones existence and results in blind loyalty which is necessary, before any substantial stimulus money trickles down in support of the free market a new socially dependent worker base needs to be established, thats why the big heavy handed push for passage of Universal Health Care without benefit of first trying to reform the private health care system, this is the ultimate power grab that once established will allow the Fed Gov unprecedented power and control over all our lives, creating private sector jobs does little to help the Democrats create the socially dependent base they desperately need to cement their control over the masses.

Nov 09 08:26 AM

[PastTense:]

Similar arguments can be made against long-term job creation aspects of the indirect methods. For example the cash for clunkers program simply pulled some car demand from the future (as well as having a negative impact on moderate income car buyers by reducing the supply of used cars--and thus raising their prices).

Nov 09 08:29 AM

[User 353732:]

Do thieves create real jobs?
Do deceivers create real jobs?
Do bullies create real jobs?

Do parasites increase production?

Real jobs can only be created when businesses and households have confidence, just access to credit for the worthy, equitable alignment of risks and rewards and a celebration of innovation and entrepreneurship. These conditions do not exist in Nov. 2009 in America....... Because of the malevolent will and actions of the US Regime.

Just as Wall St is the objective enemy of Main St and WashDc the objective enemy of the Middle Class, so in combination, the US Regime is the great destroyer of real Middle Class jobs.
As the US Regime increases, so America decreases.

Nov 09 09:06 AM

[enigmaman:]

" Show me one time in our history when the US economy moved forward when Wash. DC, Wall Street and Main Street were at odds with each other" which is currently the case. Ive asked this question many times before without ever getting an answer, your post is saying the same thing lets see if anyone will dispute either. None of what we have seen happening the last decade can stand much longer and it will correct, but to what end, I believe as you state " As the US Regime increases, so America decreases. " when all the dust finally settles there will be the Fed Government, presiding over two classes, the rich and the poor, the middle class, would have been rendered "endangered" but without benefit of protection by the Government and would soon be just a shadow of what it was was and represented, this is after all the ultimate goal of the Fed government


On Nov 09 09:06 AM User 353732 wrote:

> Do thieves create real jobs?
> Do deceivers create real jobs?
> Do bullies create real jobs?
>
> Do parasites increase production?
>
> Real jobs can only be created when businesses and households have
> confidence, just access to credit for the worthy, equitable alignment
> of risks and rewards and a celebration of innovation and entrepreneurship.
> These conditions do not exist in Nov. 2009 in America....... Because
> of the malevolent will and actions of the US Regime.
>
> Just as Wall St is the objective enemy of Main St and WashDc the
> objective enemy of the Middle Class, so in combination, the US Regime
> is the great destroyer of real Middle Class jobs.
> As the US Regime increases, so America decreases.

Nov 09 09:21 AM

[Tom Burger:]

"Jobs" are easy to create, but wealth and well being are not. We need to produce things that people need at a cost they can afford -- not create make-work jobs. Only a relatively free, division of labor economy can do that.

It's ridiculous to say that "it isn't clear" whether or not the government can create "sustainable jobs." The government cannot do that -- it is absolutely perfectly clear that it cannot. Besides, it is the wrong question.

Nov 09 09:39 AM

[John Galt:]

Obama isn't focused on the Economy because right now his Democrats have a super majority and control our government. Instead of representing the people, he wants to pass his parties holy grail... Health care.

It's about politics. We have one party in control. He has the votes (until 2010), so he tries to pass health care. If he didn't have the votes, he'd probably be focused on the economy but Obama is a politican. He won't get this chance later, so he has to seize the opportunity now.

Every poll in America shows people worried about Jobs/the economy but all Obama focuses on are Health Care/Cap and trade. It's shocking right? No, it's not his Democrats being out of touch with American voters, it's them trying to force legislation down our throats while they can. Yes they can.

Nov 09 09:44 AM

[constab:]

I am living in the Netherlands. The Netherlands is what the people in the US would call a socialistic country. The Dutch Government has created many jobs inside and outside government. This approach is not effective because the jobs are fake jobs. The best solution is to support small and medium size companies. They are the motors of society.

Nov 09 10:37 AM

[Pat C:]

What the government can do is designate jobs and industries that cannot be outsourced. Everyone should be either working or training for the next job. For training to be successful individuals need to be sure they are not wasting their time. We need to get our heads out of the sand on this issue. Individuals feel powerless after a period of time and they begin to feel hopeless. Nationally we need to determine what we want for our Country for the future (ie. alternative energy) and encourage businesses to make the investments in the people to do it and our education system needs to get on-board. Unemployment compensation is a nice thing but people want jobs.

Nov 09 10:54 AM

[Leftfield:]

Small business and startups create most of the sustainable, value-adding jobs and growth. I believe the self-employed are not included in BLS job statistics when they fail, except for the ludicrous, made-up "birth-death" adjustment which magically adds jobs that aren't there. Self-employed don't collect unemployment insurance. They don't have lobbyists.
So, who on Wall St. or in government cares? They can create $trillions, make up the rules and reward themselves and their supporters. Captive mainstream media parrots their success. Private entrepreneurship is heading down the memory hole where millions of good, now outsourced jobs, lie.

Nov 09 11:54 AM

[redwine44:]

I agree with enigmaman: the Obama admin., like most communist-trained folk, are opposed to letting people run their own lives and their own economic fortunes. They want govt. dependence, not independence. A few years ago, even Democrat Moynihan, I believe, called the welfare state a slave state in more or less words.

Leftist ideology only sees wealth after it is created and says, hey, I want what the other guy has. Obamaism rejects the foundation of our nation, a nation where everybody who chooses can engage in whatever legal self-benefiting econ. activty they choose.

Don't expect the Demo. party to line up with private sector job creation. Only with govt. sector job creation. If you strip out govt. jobs, SEIU and so forth, the unionization rate is probably under 10%, thanks to wrong-headed Democrat party/left wing foolishness.

Now, what was that about jobs? Productivity? The US is a mighty strong country and will survive and even prosper despite Obama, not because of any policy he has espoused so far.

Nov 09 12:21 PM

[jerrydd:]

Here is how to do this better for jobs. We can have a stimulus that costs almost nothing to the taxpayer, in fact paid a lot by Iran, Russia, oil dictators!!

How is start up loans for RE companies and energy eff ones. Let most anyone with a good business plan through the SBA get start up loans to build or install homes. small business size windgenerators, solar CSP unit, CHP, small lightweight, aero 3 wheel EV's, etc. Then loans to buy, install, etc these.

Loans for home, building eff upgrades from windows, insulation, etc are next. This would put construction, material workers back to work.

Banks have shown they won't loan so other methods may be needed.

All these can be paid for in energy savings in 5 yrs so no new income costs either. This will create about 3 million jobs directly and probably 6 million indirectly of people supporting them.

Next is a fossil fuel tax to pay their full cost of the direct, indirect subsidies we already pay in our income tax, health care, etc. it's time those who make, benefit from those costs to pay them It should be a $1.50/gal on oil and about double the price of coal.

But you say a tax will kill the economy. Not if it's put in over 2 yrs at 4% each month and loans given to buy more eff cars, etc to cut people's costs. Switching trucks, semi's to NG is very cost effective now being under 50% of the cost of diesel/gasoline. This can in 5 yrs cut imported oil needs.

The beauty of this is oil, coal will drop in price making Iran, Russia, oil dictators pay most of the oil tax, coal is only 25% of your electric bill so it won't go up much.

But new, more eff cars, trucks, EV's, PHEV's and mass transit will create more new jobs too.

The fossil fuel tax revenue, 1/3 would go to a tax cut so those people paying it have the extra money needed if they continue to use the same amount or better, use less and have extra income, the more likely outcome. 1/3 to to help switching to more eff cars, trucks, homes, buildings and 1/3 to balance the budget fossil fuels have been a large part in making.

So this program would have a net increase of about 8-10 million jobs of both direct and supporting those who have the new jobs, solve our imported oil problem, let us leave the Persian gulf between the 2 are about $1T/yr in a few yrs if we don't, stop subsidizing our enemies, oil/coal corporations and balance the budget.. All at little cost to the gov, in fact get rid of our debt on our children and make our country strong again.

Or we will be broke, at war, our enemies strong and we will be weak. To me it's the only real patriotic way to go.

Nov 09 12:58 PM

[Bob 123:]

Why would I want to create a job here in the U.S. when I would be obligated to pay exorbitant health-care costs/benefits for my newly hired employee(s) ?
No, better to create that job in China or Europe, where health costs are picked up by the government.

No, Obama understands the problem alright -- fix health-care. Unfortunately, the "fix" that is emerging does not fix the problem -- too much right-wing-batshit-win... guaranteed to protect health industry profits and not provide a real solution.

You and your right-wingnut friends should remember -- Republicans have no answers other than "richer - rich and screw everyone else". Expect no mercy from them if and when they reclaim political power.


On Nov 09 09:44 AM John Galt wrote:

> Obama isn't focused on the Economy because right now his Democrats
> have a super majority and control our government. Instead of representing
> the people, he wants to pass his parties holy grail... Health care.
>
>
> It's about politics. We have one party in control. He has the votes
> (until 2010), so he tries to pass health care. If he didn't have
> the votes, he'd probably be focused on the economy but Obama is a
> politican. He won't get this chance later, so he has to seize the
> opportunity now.
>
> Every poll in America shows people worried about Jobs/the economy
> but all Obama focuses on are Health Care/Cap and trade. It's shocking
> right? No, it's not his Democrats being out of touch with American
> voters, it's them trying to force legislation down our throats while
> they can. Yes they can.

Nov 09 04:27 PM

[GeminiAtlas:]

"This whole issue of how to best stimulate the short-term economy is a big puzzle to me."
Big puzzle to me as well. Why would they be so focused on the short-term in any case (a la stimulus)? Just to create jobs that last a year and then go away thereafter. Why? That makes no sense. The exact solution is to let things work themselves out to create better jobs that stick around for a little bit. The stimulus just creates zombie jobs that add no value to the economy except as a vote to entrenched politicians. Ahh, now I understand...

Nov 09 06:27 PM

[redwine44:]

Ah Bob 123. A cogent, well thought out, articulate, understanding of how wealth is created by entrepenuers, written in the spirit of Franklin, Washington, Jefferson, and Hamilton. The country, with all its people and wealth, built by screw anyone mentality? Oh, give it a rest, Bob. Jobs are created by one entity with enough revenue and profit to hire the next guy. Have you created any jobs? Where does your profit come from in order to hire the addition to your company? Childish hatred of conservatives or Republicans does not constitute an economic tour de force.

Health care in the US is the highest yet created by human science. Quit paying for scientists, skip the new lightweight plaster casts, trash MRI and CAT scans, dump out all your cholestoral drugs, and then watch costs go down. Along with life spans. The Obama plan is not going to do anything to lower costs, it is just another welfare plan. You will pay my Doctor bills. Thank you. I can then go and buy an nice bottle of wine instead of saving up my money to pay my own bills.

Nov 09 08:45 PM

[Glen L.:]

The author, and some of the commenters, need to read a little Bastiat. Or listen. Go to mises.org and listen to his brilliant essay, "What is Seen and What is Not Seen". Bastiat saw through the socialist nonsense 160 years ago, and his words ring just as true and topical today.

Nov 09 08:59 PM