In the last
meeting before the draft report was to be written, a committee member suggested
waiving application fees for projects creating more than fifty jobs. In the midst of the resulting conversation
about how job creation promises could be monitored, I was the only true contrarian
voice. I noted that five existing
business adding ten new jobs apiece had been consistently found to be a more
beneficial form of growth. And that
waiving the fees for the larger business, especially if those fees had be
recaptured elsewhere, was actually a disincentive to the smaller, more
beneficial businesses.
The group
chewed over my suggestion for a few moments.
Someone suggested that perhaps the fifty job creation target should be adjusted
downward and the conversation moved on.
I considered asking about fifty businesses creating one new job apiece,
but didn’t sense a receptive audience.
The
discussion highlighted a concern that has been gnawing at me about the job
creation focus during the recent presidential election. Jobs are a good thing and I certainly want
everyone whose financial health depends on employment to be able to find a
job. But in our strict numeric tallying
of jobs, we seem to have lost track of the social utility of some jobs over
other jobs.
My favorite
silly example is to point out that for $1 million, I can create 48 jobs for a
year. That’s sounds pretty reasonable,
right? It’d be 48 people earning $10 per
hour digging holes and filling them back in.
There would be absolutely no social value in the work. Indeed, if done well, there would be little
evidence of site disturbance after the year was over.
Some might
connect the hole-digging suggestion to the stimulus programs that were
implemented at the depths of the recent recession. There
is some validity to the connection, but there needn’t have been.
In general,
I support the federal stimulus initiative.
Government should have a role in minimizing the pain of economic
contractions. But I fear that in many
communities the intent was distorted by political realities. Using government dollars to create jobs
during times of economic duress is a fine idea if (1) the improvements that are
created have a social utility worth the dollars spent and (2) the improvements
are focused to encourage private investment, thereby leveraging the government
funds.
On the
recent stimulus efforts, I think we earned no better that a C on the social
utility and as low as a D- on the encouragement of private investment. The stimulus effort often created jobs, but
too often they weren’t the right jobs or as many jobs as could have been
possible. And the shortfall seemed to have
resulted somewhat from the way the federal rules were written, but more so from
local implementation.
Nor was the
abuse of stimulus limited to the past few years. Robert Moses was exceptional at bending the federal
stimulus programs of the Great Depression to his own ends.
As always
seems to be the case in my recent posts, StrongTowns weighs in with cogent and
on-point thoughts on job creation. From
their Curbside Chat booklet, “Jobs are critically important, perhaps more now
than at any time since the Great Depression, but we often confuse the
discussion of building infrastructure that is productive with building
infrastructure to create jobs. It is
possible to do both, and our current situation demands that we do so. …
Jobs and growth are the results of a productive system, not a proxy for
one.”
Exactly. We need a productive economy that allows the
U.S. to compete effectively in the world market and will be robust over time. When we use job totals to measure the
economy, without considering the types of jobs, we lose track of those goals.
This ties
back into urbanism because urbanism is good at creating durable jobs over time,
but less good at creating big lumps of new jobs. Urbanism is good at creating market
conditions where five neighborhood pharmacies open over a period of years, each
creating ten jobs. It’s less good at
attracting a chain pharmacy that will create fifty jobs. The neighborhood pharmacies are also better
additions to towns, requiring less driving and less infrastructure to maintain. And yet most cities will chase the chain
pharmacy to the exclusion of the neighborhood alternatives.
To
illustrate this point, look at the $80 billion in incentives that states are
offering to attract businesses away from other states. In Texas, $19 billion in incentives are being
offered to new businesses at the same time that $31 billion is being taken from
already slim school budgets. Admittedly,
many of the businesses being sought are manufacturing rather than retail. But at a local level, dwindling redevelopment
dollars are often used to pursue to pursue big box opportunities, rather that
their smaller, neighborhood alternatives.
Furthermore,
many aspects of the marketplace, such as differing wholesale pricing, also
favor the chains. It’s not just in
government where urbanism is given short shrift. It is up and down the economic ladder.
Encouraging
urbanism and the slow incremental job growth that it produces is the best way
to create the jobs that we want to leave for the generations to follow. But few of our economic policies acknowledge
that reality.
If you’re
wondering how the final committee report handled the idea of fee waivers for
large job creators, I have no idea. When
we adjourned the last meeting, we were told that the draft report would be
distributed to all committee members for final comments. I received nothing further. Nor have I tried to track down the final
report. Perhaps I feared the answer.
As always,
your questions or comments will be appreciated.
Please comment below or email me.
And thanks for reading. - Dave Alden (davealden53@comcast.net)
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