Government Can Create Jobs: By Hiring People

The government can't create jobs. Only the private sector can. So ditch the naïve talk that Uncle Sam can wade into this economic mess and do anything meaningful to fix it.

We hear these sorts of assertions with increasing regularity these days, a rhetorical shrug at the reality that the American economy is stuck in a hole, leaving millions of people out work and unable to pay their bills. While the political impediments to action remain formidable, the government could quickly do a great deal to add paychecks and restore vigor to the economy. The magic trick would work like this: The government could start hiring people.

On Friday, as the Labor Department delivered its latest monthly snapshot of the anemic job market, two key facts underscored this prescription. The private sector added a modest 104,000 net jobs in October. That was not enough to absorb even new entrants to the job market, let alone cut deeply into the national unemployment rate, now at 9 percent. Yet it still amounted to welcome progress. During the same month, however, the government eliminated a net 24,000 jobs, heaping fresh woe on the economy. Most of those losses -- a net 20,000 -- were at the state level.

Whatever your political persuasion, does anyone out there seriously believe that state governments lack for important tasks to complete in the public interest? Yet most are now staring at gaping budget deficits and are cutting workers in an effort to square the books.

From California to Florida, classrooms are both packed and dilapidated, reflecting a need for more teachers and upgraded buildings. Roads and bridges are disintegrating through wear and neglect even as millions of construction workers remain jobless. The social service agencies that administer relief programs -- from unemployment benefits and job training to food stamps and emergency rental assistance -- are shedding workers even as demand for such help grows.

Okay, so that last one trips controversy, with some people clinging to the idea that when you hand a jobless person a check large enough to prevent them from, say, having to go dumpster-diving for dinner, you sweeten the joys of unemployment so much that they lose all interest in finding their way back to the workplace. Put that one aside, if you will. But who wants to fire cops, firefighters and school teachers? Who wants to stand in line longer at the department of motor vehicles, or spend more time waiting for commuter buses and trains because service is being cut? Who likes the feeling of running into a pothole at 60 miles an hour?

As state coffers continue to show the effects of the worst economic downturn since the Depression, the resulting budget shortfalls have reached staggering proportions. California could be looking at a deficit reaching $8 billion in its next budget year, according to the Sacramento Bee. New York confronts an anticipated $2 billion state budget shortfall (even as Gov. Andrew Cumo resists calls to increase taxes on millionaires).

The much maligned Obama stimulus plan -- no curative, but a useful palliative -- made this problem smaller while it lasted: It delivered $127 billion worth of relief to states over the past two fiscal years, limiting layoffs of school teachers and helping finance health care for low-income people, according to an analysis by the Center on Budget and Policy Priorities. But the amount of federal aid for states that is left in the pipeline for the current fiscal year is only $6 billion, virtually ensuring fresh job losses to come.

The contrast between the business world and government is not new. For months, the private sector has been gradually if inadequately healing, adding some jobs, while the public sector has been adding fresh wounds.

Since the beginning of 2010, the private sector has seen a net increase of of 2.7 million jobs, or about 125,000 jobs per month, according to Labor Department data. That is no cause for a victory parade, but it is a sign of a tentative recovery, if only it were accompanied by a crucially needed boost from public coffers. Yet during those same 22 months, some 509,000 net government jobs have been eliminated, more than 23,000 per month.

In a blog post, Mark Doms, chief economist at the Commerce Department, takes this analysis deeper, finding that over the first nine months of the year, the private sector has been creating jobs at roughly the same pace that state and local governments have been destroying them. Between August 2008 and September of this year, local school employment shrunk by 270,000 jobs, Doms found -- this, while enrollments expanded.

Only ideological silliness and political malice prevents us from using our government to improve our collective economic lot by guaranteeing increases in paychecks, the one thing that could make the phantom recovery a reality. When we fire a schoolteacher, we not only divest from educating children, we also take dollars out of the economy. We cut what that teacher can spend at the local coffee shop, at the stationery store and at the boutique (not to mention at the pharmacy and on the psychiatrist's couch). When we hire schoolteachers, we add dollars that cycle through the system, and that prompts the private sector to hire more, recognizing a fresh influx of dollars that can be captured.

Only ideological silliness (and, let's face it, Republican obstructionism), prevents the obvious fix: having the government put people back to work in the service of public goods such as infrastructure, education, public health and research. But we can at least begin to address the dire picture of joblessness by dispatching the notion that the government can't create jobs.

Anyone willing to write a check can create a job. Only two camps have access to a big enough checkbook to create enough of them to make a difference. The private sector must answer to corporate shareholders who have no appetite for hiring until they see profits attached to adding payroll. The government is supposed to answer to the rest of us. Where is the constituency against job creation?