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 Job 1 is creating jobs
by Tom Campbell
July 15, 2010
There is some disagreement about whether we are experiencing a double dip recession or a stagnant recovery, but few believe North Carolina’s economy is improving very fast. The fundamental problem is employers are not creating new jobs.
Governor Perdue often states her top priority is creating jobs and legislative leaders echo her priority, but their solutions are misguided and too expensive. Before adjourning, our legislature handed out 240 million dollars in economic incentives to large corporations.
Our track record in the incentives game is less than stellar. Since dipping our feet in the incentive waters in the mid 1990’s, we have quickly plunged into the deep end. It often takes years, if ever, for corporations to create the jobs promised and in far too many instances we have had to claw back incentive dollars. These corporate giants operate solely in their own enlightened self-interests. That’s why they chose us and why they will just as quickly leave us.
How much is reasonable to invest in each new job? It is not at all uncommon to see six figure sums given per job created. When resources are scarce, it is fair to ask if we are getting the best bang for our buck. We think not.
We are working at the wrong end of the job creation pendulum. Seven out of ten jobs in our state are created and sustained by small businesses. Leaders pay lip service to them but either do not understand small businesses or are not serious about doing what it takes to help them. North Carolina needs to change its economic development policy and become the state that encourages and nurtures small businesses. Two practical suggestions would yield more jobs with less cost per job created and less risk.
Even as large banks and financial institutions are reporting handsome profits, they are still not lending to small companies and without capital our small enterprises cannot expand. Why not dedicate one-third of the sum our legislature just allocated to co-insure loans (say 50 percent of each loan) to worthy small companies? This would incentivize the banks to lend and if the business repays the loan, there’s no cost to taxpayers. Even if we pay out on a few defaulted loans we will have invested in firms already in our state.
We should also jump-start job creation by instituting a program that would pay employers a percentage, say twenty percent, of the hourly wage for every new hire for a period up to 18 months. The concept needs further definition but the employer, the employee and the taxpayers would all be working in concert. For example, a new 20 dollar per hour employee would earn 41,600 dollars per year. The employer would only pay 33,280 dollars, taxpayers would invest 8,000 dollars (compared to hundreds of thousands per new job) and the employee would have 18 months to prove worthy of retention.
These are two ideas that are better public policy, would put people to work immediately, help businesses already located in our state and benefit every county instead of just the few, mostly urban areas that usually get the new plants. If job creation is truly job 1, it is time to change direction and pull together to improve our economy. |
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