In my third review of the candidates’ positions on the economy I’m going to take a look at what they’ve been saying about job creation.
John McCain hasn’t said much about job creation per se. I think it’s reasonable to conclude that his view is that creating jobs is the responsibility of private industry and that the best way to encourage that is by reducing the marginal rate on corporate income taxes from 35% to 25%, keeping taxes on capital gains and dividends low, and allow expensing, first year deduction, of equipment and technology investments. This last is the best single economic proposal I’ve seen from any of the candidates. IIRC we’re the only OECD country that doesn’t already do that. Sen. McCain doesn’t make any projections of how many jobs might be created as a consequence of his proposals.
Hillary Clinton, on the other hand, ties her proposals for creating jobs directly to her energy policies. On her web site she made the claim which she repeated in the debate yesterday that her “Strategic Energy Initiative” would create 5 million jobs over ten years. I had some difficulty making her numbers add up until I considered her proposal for making government buildings more efficient:
Hillary will dedicate $1 billion annually to states to enable them to make grants or low-interest loans to improve energy efficiency in public buildings, such as schools, police stations, firehouses and offices. Buildings account for 40 percent of U.S. greenhouse gas emissions nationwide and present a tremendous opportunity for reducing emissions. This Green Building Fund will create 100,000 jobs, including at least 1,900 in Maryland.
Let’s assume that 10% of the the $1 billion goes to administration, creating a few score of jobs in Washington, DC. That leaves $900 million. Let’s further assume that, of the $900 million, $400 million will be spent on materials. Job creation as a consequence will be indirect and many of the jobs created may be in China, Taiwan, or Thailand. That leaves $500 million. At a total compensation of $50,000 that would create 10,000 jobs. If you create the same jobs every year for ten years, that’s 100,000 jobs. But the total creation of jobs is 10,000.
Now I think this proposal is actually a pretty good one. We often ignore just how inefficient and polluting our government is and, well, they should lead by example. Don’t expect additional money for this to come from the states—they’re already strapped as it is. So as a jobs creation program it’s true but it’s also highly misleading.
Is the same thing true for her claim of creating 5 million jobs over ten years with her “Strategic Energy Initiative”? That’s $150 billion over ten years or $15 billion per year. Divide $15 billion by $50,000 and you get 300,000. Multiply that by ten years (counting the same jobs over and over again) and you get 3 million jobs (another figure I’ve heard her mention). To keep things in perspective the economy needs to create 150,000 per month just to accommodate the normal increase in the population. This will scarcely put a dent in that number and there’s no word here how many net jobs will be created.
She also mentions job training, particularly “green job” training. Job training is mentioned by all of the candidates as an important part of their policy proposals. I’m skeptical of this. To what end? In my view if good, stable jobs exist, people will get the skills to take them. Will Americans pursue acquiring the skills to perform non-existent jobs?
Here are the statements on job creation from Barack Obama’s web site:
* Support Job Creation: Barack Obama believes we need to double federal funding for basic research and make the research and development tax credit permanent to help create high-paying, secure jobs. Obama will also make long-term investments in education, training, and workforce development so that Americans can leverage our strengths – our ingenuity and entrepreneurialism – to create new high-wage jobs and prosper in a world economy.
* Invest in U.S. Manufacturing: The Obama comprehensive energy independence and climate change plan will invest in America’s highly-skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the first wave of green technologies that will be in high demand throughout the world. Obama will also provide assistance to the domestic auto industry to ensure that new fuel-efficient vehicles are built by American workers.
* Create New Job Training Programs for Clean Technologies: The Obama plan will increase funding for federal workforce training programs and direct these programs to incorporate green technologies training, such as advanced manufacturing and weatherization training, into their efforts to help Americans find and retain stable, high-paying jobs. Obama will also create an energy-focused youth jobs program to invest in disconnected and disadvantaged youth.
* Boost the Renewable Energy Sector and Create New Jobs: The Obama plan will create new federal policies, and expand existing ones, that have been proven to create new American jobs. Obama will create a federal Renewable Portfolio Standard (RPS) that will require 25 percent of American electricity be derived from renewable sources by 2025, which has the potential to create hundreds of thousands of new jobs on its own. Obama will also extend the Production Tax Credit, a credit used successfully by American farmers and investors to increase renewable energy production and create new local jobs.
He also mentions subsidizing the deployment of broadband Internet access. I’ll deal with that in another post.
As I’ve already mentioned I’m skeptical of this “field of dreams” approach to job creation i.e. if you train them, they’ll be hired. Why isn’t there a larger market for these jobs already? I submit that people aren’t getting trained for these jobs because there aren’t enough of these jobs to be had and if the plan is for a sort of WPA that should be stated flat out without the persiflage. I have no problems with a federal jobs program of that sort in a crisis but I don’t see a crisis of that severity right now. Unemployment is hovering around 5%. This is not the Great Depression. It’s a loser as a long-term plan.
Previous posts on this subject:
The Candidates on the Economy: Taxes
The Candidates on the Economy: Energy Policy (Updated)
Thanks for the review of the plans, Dave.