The limits of the job-creation bill

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I am thrilled, as are many others, that Congress has found a way to actually move forward on an issue. I refer to the apparent progress of the $15-billion job-creation bill.

Unfortunately, as I’ve explained before, I’m pretty sure the legislation won’t have as much of an impact as we’re hoping for. I saw another survey just today that indicates the main mechanism being employed—tax breaks for hiring—isn’t really what companies want. This is from the summary of an American Express survey of small businesses:

The biggest hurdle for hiring is not necessarily what has been the focus of the current job creation discussion. Customer demand is by far the greatest determinant in hiring (42%), not tax credits (11%) or access to financing (5%). While small business owners would take advantage of a tax credit for hiring if they had one (51%), it is not a good predictor of small business hiring.

Here’s another interesting bit from the survey:

Almost 60% of small business owners have not pursued credit in the last 6 months.  Of that group, 22% worry about default or bankruptcy and 30% say there isn’t enough demand for their products or services to warrant taking on new debt.

Seems what businesses really want is more demand for their products and services. Duh, right? Government spending would drum up demand in plenty of industries, but I guess more government spending creates a political problem—plus there are legitimate concerns about the largess of the deficit.

If we directly put money into consumers’ hands, there’s a big risk they’ll save the cash. It would only be in their individual interest to do so, after all. Business spending is one potential source to tap—and there are incentives to accelerate capital investment in the jobs bill.

Here’s another idea. What about funneling more money to state and local governments? A whole lot of police officers and teachers didn’t lose their jobs this past year because of the stimulus bill of early 2009. Maybe those would be some good jobs to save. 

I found this blog post really interesting. It’s about how the Obama Adminstration is toying with the idea of letting state housing finance agencies play a larger role in determining the right steps to alleviate the foreclosure crisis. Local people well-versed in the specific nature of local problems would take the lead.

I wonder if something similar might work for jobs.

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