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Ecclesiam Suam (Paths of the Church)


Jobs, Jobs, Jobs

February 12, 2010

In his encyclical, Caritas in Veritate, Pope Benedict XVI writes that economics should be guided not simply by profits but by "an ethics which is people-centered." This is why he places such an emphasis on employment. "The dignity of the individual and the demands of justice require," he says, "that we continue to prioritize the goal of access to steady employment for everyone" (italics in original).

Since this is an election year, Washington has come to the same conclusion for different reasons. The rush is on to put together a jobs bill that will give at least the appearance that incumbents are doing something about unemployment, which will remain at nine to 10 percent for the rest of the year. Alas, employment, as economists say, is a lagging indicator. It recovers from a recession a long time after the stock market.

Washington has not in fact ignored the issue of unemployment. The first stimulus bill, passed last year, had more than simple tax cuts to stimulate the economy. There were also programs that would employ people in education, conservation and other areas. Some objected that all the stimulus was not immediately effective and that some of the programs would not create jobs for a year or two. We can now be grateful for this since unemployment is still with us.

But with unemployment at around 10 percent, it is obvious that more needs to be done. The problem, however, is that huge federal deficits make it difficult for the government to do anything significant. Partisan politics also makes it difficult to enact a jobs bill quickly. Harry Reid, Democratic majority leader in the Senate, has therefore proposed a very modest jobs bill in the hopes that it could pass quickly.

Granted that there is not much to spend on a jobs bill, it is more important than ever that we get as much bang for the buck as possible. Alas, Congress and the White House appear willing to reach for the same broken tools that have not worked in the past. For example, the long-discredited tax credit for new hires.

The proposal sounds good: give a tax credit to companies that hire new employees. Democrats like the tax credit because it supposedly creates jobs; Republicans like it because they can defend it as a tax cut.

The problem is that in the past companies have laid off workers and then hired new workers in order to qualify for the tax credit. The credit is also inefficient since it goes to many companies that would have hired new workers anyway without the credit. This is especially true of businesses that are seasonal.

Supporters of the tax credit claim that they will have language in the bill to stop such abuses, but all that means is the program will be more difficult for employers to understand and for the government to administer. The fact remains; the tax code is a very blunt instrument for creating jobs.

The other discredited jobs idea is highway spending. A case can be made for rebuilding our public infrastructure, including highways, but lets not kid ourselves that spending on highways creates lots of jobs. Highways are not built by thousands of unskilled men with shovels as in the past. They are built by fewer, well-trained workers operating very expensive equipment. Highway infrastructure repairs require long-term planning, steady execution and funding through increased gasoline taxes not quick fixes as part of a jobs program.

What is needed during a recession is a real jobs program that actually employs anyone who wants to work at minimum wage. The government as the employer of last resort is considered socialist by its critics, but it a much more efficient jobs program than many of the programs being pushed on Capitol Hill. As the economy improves, these jobs can be phased out.

When the snow finally stopped falling in Washington, people with shovels fanned out over the city and offered to work clearing sidewalks and driveways. This was true shovel-ready work. People want jobs and we should make sure that every penny in a job bills is not wasted. The economy should be by "people-centered."