Thursday, August 18, 2011

A plan to create jobs NOW.

The stimulus (American Recovery and Reinvestment Act-ARRA) cost $787 billion and created an estimated 3-4 million jobs.  Suppose it was possible to create over 1.5 million new jobs while investing a fraction of what ARRA cost.  There is such a plan.   It was developed by Demos, a non-partisan public policy research and advocacy organization. 

Demos proposes that the federal government “create jobs for the unemployed directly and immediately in public employment programs that produce useful goods and services for the public’s benefit…[such as]…” construction work (e.g., the rehabilitation of abandoned or sub-standard housing), conservation measures (e.g., caulking windows and doors in private dwellings), the construction of new affordable housing units, the improvement of existing public parks, the construction of new parks, and the beautification and maintenance of indoor and out­door public spaces.  The program also could expand and improve the quality of public services in areas such as health care, child care, education, recreation, elder care, and cultural enrichment. Special projects could be undertaken in each of these areas, and existing levels of service delivery could be enhanced. In­stead of being forced to cut public services during a recession, government agencies could offer better services than in non-recessionary periods.”

Eligibility requirements for the jobs program would insure that those in most need of assistance, the long-term unemployed, would receive assistance immediately.  Demos reasons that since these people are in most need of a job and are suffering most economically, they would immediately spend their income.  That spending would have multiplier effect, creating more jobs.

Demos estimates that the total jobs program cost for directly creating 1 million jobs would be $46.4 billion per year but that taxes and other government revenue savings generated by the program would reduce the net cost to $28.6 billion.  Additionally, the program would indirectly create another 414,000 jobs.

Demos argues that this program to directly create jobs could be fully funded by simply allowing the Bush tax cuts to expire.  An additional modest stock transfer tax and/or small payroll tax—like the way we fund unemployment insurance—could be established in order to create a trust fund to pay for the program after the first few years. 

This is the kind of plan for creating jobs that we should be considering.  It is immediate, has worked before (in the 1930s), is relatively inexpensive, provides the most benefit to those in most need, has significant multiplier benefits spinning off other job creation, and can be fully funded without placing an increased tax burden on 90%+ of American tax payers. 

Read the full Demos plan here:

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