NC Policy Watch
By: Bill Schweke
April 1, 2011
"Jobs!" At this juncture of a painfully slow recovery from a major recession, there is little doubt regarding what most North Carolinians wants the most from their public policymakers and the private sector.
Those on the political right do not believe that there is much that will deliver the "goods" other than tax and budget cuts and regulatory relief. Ultimately, they think that changes in the tax code will promote more enterprise startups and expansion, more jobs and income, as well as raise public revenues in the long-term.
Progressive leaders in contrast, are concerned about the negative impacts of cuts in the social safety net that would result from more budget cutting. They contend that there must be some good options that meet the needs of the jobless (especially during the next six months to two years) besides the trickledown ideas of the right.
Here are some "best of both worlds" suggestions:
Government can help. In our capitalist economy, it is our private investors and entrepreneurs that create jobs. However, there is a lot that state government can do to spur development. Public institutions must not bury their heads in the sand.
We need a balanced approach. In the long-run, adequate and appropriate investments in public goods, along with sensible regulation, a moderate, equitable, and balanced revenue system, a modern physical infrastructure, and "good government," will contribute the most to the goals of a sustainable and more widely shared standard of living. This is where policymakers should put the lion's share of their funds and commitment.
Education and training are essential. Of all the things government can do, crafting world-class educational institutions, up-to-date occupational preparation, and high quality adult targeted retraining policies and programs certainly matter the most. We need to equip today's and tomorrow's workforce with the skills and attitudes for economic success and civic participation in our increasingly knowledge-based economy.
Job creation programs can make a difference. During most phases of the business cycle, direct job creation will not be the top objective of a state's economic development effort. Instead, investments that support entrepreneurial initiative, innovation, increased productivity, and higher living standards should be the aim.
There are points throughout the business cycle, however, in which private job creation - i.e. the use of customized business and management assistance programs and financial tools to create additional wage-earning jobs in the private sector - is appropriate and even essential.
Now, in this time of slow recovery, is one of those moments - a moment in which direct efforts to create jobs and the use of fiscal powers in a counter-cyclical manner are of prime importance.
This "jobs now" rationale applies to both added private sector and public sector job generation. In the private sector, deeper job hiring subsidies might be needed. For example, it would be wise to consider providing a partial wage and benefit grant subsidy for six months to an existing small business that agrees to hire an unemployed individual.
Likewise, transitional public job creation should be considered. Such community or public job creation seeks to use public funds to create wage-paying jobs in the public and not-for-profit sector for persons who cannot otherwise find employment. These jobs can be structured to help develop participants' work-related skills, with both short-term and long-term payoffs for both participants and the economy.
Work projects, moreover, can be designed to address pressing community needs or otherwise promote the public interest, such as childcare, housing rehabilitation , environmental conservation, neighborhood cleanup, recreation, urban gardening, recycling, and many others. These efforts create amenities and community development. Similar programs can be directed at the long-term unemployed, whose skills and confidence are often eroding on a daily basis to the point that they are vulnerable to dropping out of the labor market altogether.
So, to sum up, government, in partnership with the business community, nonprofits, and social entrepreneurs, should focus on expanding opportunities and wealth generation in three ways: (1) smart governance and world class public goods; (2) "trickle up" business assistance strategies; and (3) anti-recessionary initiatives.
Ultimately, due to the constraints on states to run yearly deficits or print money, North Carolina will not be able to respond to the full scale of today's unemployment challenge. However, it can do much, much more, to make a difference in the citizenry's employment prospects and to lay the groundwork for the state's continued economic development.
Now is the time to tackle this challenge.
William Schweke is a Senior Fellow specializing in economic development at the Furham office of CFED.