Creating jobs is cheaper than you think

May 21, 2010

Creating jobs is cheaper than you think

The Local Jobs for America Act, one of the best proposals for large-scale job creation put forth by Congress, would create or save more than 675,000 jobs in community-based non-profit organizations and local governments over the next two years. Unfortunately, concerns over the federal budget deficit have created a major hurdle blocking the bill’s passage. New EPI research shows that the costs of those job creation efforts are significantly smaller than is often stated – and well worth the investment.

EPI’s new Policy Memo, Cheaper Than You Think, shows that while the Local Jobs for America Act, introduced earlier this year by Rep. George Miller (D. Calif.), would spend $75 billion over two years to create and preserve jobs in local communities around the country, more than half of that price tag would likely be offset by higher tax collections and reduced safety net expenditures.

The paper, by economist Josh Bivens and researcher Kathryn Edwards, takes estimates from the Education and Labor Committee on the number of jobs that would be retained or created, and then uses that data to estimate the impact that these jobs would have on government spending on unemployment insurance and on government revenues from increased income and payroll tax receipts. It finds that reduced safety net spending and higher tax receipts would substantially reduce the bottom-line impact on federal budget deficits.

“While the Local Jobs for America Act does indeed spend serious money aimed at creating jobs in the short-run, its net cost will be much lower than advertised as it puts people back to work and turns them into tax payers rather than benefit collectors,” the Policy Memo states.

The Local Jobs for America Act contains many of the same recommendations EPI put forth last year in its American Jobs Plan. In March, when Rep. Miller introduced the bill, EPI Vice President Ross Eisenbrey applauded it as “exactly the kind of bold response we need to address the worst jobs crisis since the Great Depression.”

“Misguided critics will undoubtedly say we can’t afford legislation like this, but they are wrong,” Eisenbrey wrote. “The fact is that the costs of inaction to our future prosperity are far greater than the cost of this bill.”

Event: The impact of long-term unemployment
The current economic downturn has produced not only the highest levels of unemployment in a generation, but also record levels of long-term unemployment. Nearly 46% of unemployed workers have been unemployed for at least six months, representing the highest rate of long-term unemployment in at least six decades.

On May 26, EPI will host Long-term Unemployment: Causes, Consequences, and Solutions, to explore the impact of widespread unemployment and also address erroneous claims that unemployment insurance is leading to higher rates of unemployment. The event, which will run from 2:00 p.m. to 3:30 p.m. at EPI’s offices, will feature presentations from four renowned labor economists, including EPI’s Heidi Shierholz.

New staff at EPI
EPI is pleased to announce three new staff members:

Phoebe Silag, media relations director, comes to EPI from Capitol Hill, where she spent two years as communications director for Congresswoman Eddie Bernice Johnson. Silag also worked on campaigns in Iowa for several years, serving as Iowa Deputy Communications Director for Governor Bill Richardson’s presidential campaign and as Deputy Press Secretary for Chet Culver’s successful bid for governor.

Arlene Williams, director of development and strategic planning, comes to EPI from the Joint Center for Political and Economic Studies, where she served as vice president of development and strategic partnerships. Williams also served as the vice president and director of programs and development for the D.C. Children and Youth Investment Trust Corporation, and as the development director at both the Center on Budget and Policy Priorities and the American Association of Museums.

Daniel Costa, EPI’s new immigration policy analyst, is an attorney with a Master of Laws in International and Comparative Law. He has worked with the International Federation of Red Cross and Red Crescent Societies in Geneva, Switzerland, and as a policy analyst at the Great Valley Center, a University of California think tank.

EPI in the news
The Hill cited EPI’s research about the large number of workers who had dropped out or never entered the workforce during the recession. The story quoted Heidi Shierholz’ estimates that as many as 2.4 million of these workers have not yet returned to the job market and her forecast that their return could keep unemployment rates elevated for a long time. The Atlanta Journal-Constitution also quoted Shierholz in a story about the tough job market for young people. “The rug has been pulled out from under them, so they end up on their parents’ rugs,” placing an additional burden on their families, Shierholz said. The Huffington Post cited EPI’s 2009 book, Teachers, Performance Pay, and Accountability, in a story about the potential negative consequences of a merit pay system for teachers.