I found this section of Alan Blinder’s op-ed on creating jobs puzzling:
The search for a cheaper way leads to policies specifically targeted at job creation. The two main options are direct public-service employment and a new-jobs tax credit. The Obama administration and several members of Congress have proposed the latter. If most of the new public-service positions are low-wage jobs, and if the tax credit is designed well, the per-job costs of these policies are comparable: $30,000 to $40,000. I would recommend doing both, targeting roughly a million new jobs with each program, at a budgetary cost of perhaps $70 billion. While 2 million more jobs won’t end America’s gaping shortage, it would make a significant dent.
Public hiring is straightforward. But since federal civilian employment is limited, most such jobs would have to be at the state and local levels. So the federal government would be inducing lower levels of government to hire — not unlike the idea behind the new-jobs tax credit.
Where are these state jobs that cost $30,000 to $40,000? The cost of a job isn’t limited just to the wages paid to the employee. The cost is the total compensation paid to the employee which can run as high as the wages.
Here in Illinois the lowest paid state employees make around $20,000, wages alone, with total compensation between $10,000 and $15,000 more. Most make significantly more than that—total compensation plans hover in the $60,000-$70,000 range all told.
And public employees are very, very hard to get rid of nowadays. Look at all the problems state and local governments are having meeting their budgets already (let alone funding their pension plans).
I don’t know what to make of this other than everything looks a lot easier when you don’t know how much things really cost.
Later in the article Dr. Blinder acknowledges the real dog in the manger:
All these possibilities for gaming tell us two things. First, the legislation must be drafted with care. Second, the agency that administers the new-jobs tax credit must be assiduous about enforcement. But given the jobs emergency and the impending budget calamity, that doesn’t seem too much to ask.
Where is this magical place where legislation is drafted with care, with an eye towards maximum efficiency, and where the laws are rigorously enforced? I want to go here.
It doesn’t seem that the private tax credit and public job creation could have the same costs over the long term.
Is the tax credit going to follow the employee in perpetuity, or is it a one-time hiring tax credit? Is the public service employee going to be fired after the end of the program, or does the new job continue in perpetuity?
Personally, I think the government should send more money to states and local government conditioned on pension reform. Progressives in particular should see their ambitions being thwarted by the inability to affordably man their programs.
I’m afraid that would be political poison for the present Congress. The real Democratic Party constituencies these days are primarily blacks and public employees’ unions. I can’t see the Congress bucking the public employees’ unions.
Its the philosopher-king syndrome. We just need a really wise smart man….
I think I’d rather have the underpants gnomes at work on the problem.
I believe the last known underpants gnomes were recently eliminated in an accident on an airplane.
Steve