How to Create a Million Jobs in One Month
As jobs continue to evaporate, pressure is mounting for another shot of fiscal stimulus. But as Paul Krugman points out, the danger is that the Obama administration might "find itself caught in a political-economic trap, in which the very weakness of the economy undermines the administration's ability to respond effectively."
What we need right now is a jobs-creation program that cuts through all the Rube Goldberg-type provisions of the current stimulus bill. Because so many of our political leaders hate the very government they serve, they refuse to move money into immediate government jobs. They are afraid to create New Deal-type WPA programs which immediately would put people to work. Instead, they'd rather shovel money into ineffective tax cuts and questionable "shovel ready" projects that are not coming online fast enough. They also oppose funding cash-starved states which are laying off teachers and social workers, while the stimulus bills attempt to hire more construction workers. This tug of war between public and private employment has blunted the impact of the $787 billion stimulus package. If we weren't so hung up on anti-government ideology, we could have turned that stimulus money into 13 million public sector jobs. (See "The Only Thing we have to Fear is Fear ... of Government."
I'm not so much of a "Third Way" person myself, but desperate times call for creative thinking. The Republicans and blue-dog Democrats are incapable of going with sensible and efficient direct-government hiring. Well, how about utilizing the non-profit sector?
There are approximately 534,000 non-profit public charities under the 501(c)3 tax code. Let's offer each one of them $100,000 (pro-rated in monthy payments), if -- and only if -- they hire two new employees at $40,000 a year each, plus benefits including health care. The catch is that they would have to hire these two new employees within one month of signing up for the funds.
At a maximum cost of $53.6 billion we would generate more than million new jobs. And the chance of failure is minimal since we only would have to pay for jobs that actually were created. (The money could be rapidly transferred monthly through the tax collection mechanisms that each organization already has to pay its payroll taxes.)
This new income would be an enormous shot in the arm for public charities, all of which are in severe financial distress due to the drop in foundation grants, charitable donations and the crash in endowment values caused by the financial meltdown.
It would be very interesting to see conservatives argue that public charities don't deserve the support or that they will squander the money. After all, these organizations fit perfectly into our mainstream mantra: these are our "thousand points of light," designed to address needs that neither the government nor the private sector adequately serves.
The price tag is tiny when compared to what we've poured into Wall Street and into the economy already: It's only 3.6 percent as large as what we've spent on TARP and the last stimulus bill.
Most importantly, non-profits usually are nimble enough, and hungry enough for money, to quickly find new employees. They won't have to file building plans and environmental impact statements to get started on their work. They don't have to worry about whether or not the work performed will turn a profit for the charity. They don't have to worry about large bureaucracies slowing down the hiring process. And usually, they already have plenty of job applicants.
This proposal is no panacea. It doesn't directly attack the problem of rebuilding and greening the manufacturing sector, crippled by 30 years of neglect and financial manipulation. (See The Looting of America). But, music, art, dance and theatre organizations would get an enormous boost. And yes, all manner of conservative, liberal and even radical think tanks would also have more staff with which to spew out contradictory ideas. At the very least, this kind of jobs program would be particularly helpful to younger workers who are having difficulty entering and staying in the workforce.
Come on America. Let's put our people to work. It sure beats waiting around for the miracle of the market to kick in.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.
Follow Les Leopold on Twitter: www.twitter.com/les_leopold
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``We are in a global economic breakdown,'' Lyndon LaRouche observed today, adding that those who disagree, like President Barack Obama, are living in a dreamworld which will soon be shattered by reality. LaRouche pointed to the days around Oct. 12 as a crucial turning point.
My estimate is that a complete breakdown of the global financial and economic system is highly likely around the 10th to 15th of October--say Oct. 12, after the end of the U.S. government's fiscal year,'' LaRouche warned. ``We're looking at a threatened potential, total, chain reaction breakdown of the U.S. and the world. Nobody is minding the store in Washington, or in the British Vampire!''
``The U.S. is hopelessly bankrupt, and only a bankruptcy reorganization of the type I've specified can save it,'' LaRouche added. ``We have to take back all the bailout money, and use it for the reorganization.''
Well, sure it could work. And I'm sick of the undermining of America that the republicans are doing. This is serious and they just keep on with the petty repetition of nothing helpful. Everything they suggest DID NOT WORK already. Can' they see that? Are they so blinded by hate that they can see nothing else? Nemmind.... of course they are.
Okay, so fine let's just do that. Nonprofits can put people to work and they can get them doing real jobs that need doing for the two years and by then it should have evened out. It could even out sooner if only the snipers and gripers would just shut it.
Still, we need a real jobs program like the wpa and the conservation corps but you are so right about why that can't happen. We need some temporary help for the people from the government. Its an insult to all the good those jobs programs did for this country back then, and especailly insulting to the people who did the work. People WANT to work.
The jobs that such programs would create would not be long-lasting, and would only exist to give people work, even if the work they're doing is overall pointless. This is just another plea to expand the federal government and give it more power. No way.
This would only be part of a stimulus package and would make more sense than unemployment funds.
You're so right. It's MUCH better for people to be off work, heave no health insurance and lose their homes. Better for them, and better for our society and economy as a whole. Genius.
that's easy....let me keep more of my money.
Heh...your *MONEY* is what you would be paid in (say) Somalia for doing what you do. The remainder is what living in the US, rather than Somalia, is giving you for free.
Nothing's for free. Someone is paying.
Let them eat cake. With record pay going to Wall St., Our financial overlords will be too glutted with cash to lift a finger to help Joe Sixpack pay his rent.
submit your ideas to whitehouse.gov! I've ran out of patience with people sitting on the side lines and complain whine. If you have something to offer, get on with it and submit it.
bah obama didn't listen to me about the torture investigation. Would like to see someone in his cabinet with a spinal column. Possible or no?
Setting aside the problems inherent in fiat currency, I feel the biggest economic problem is, and has been since the beginning of the industrial revolution, automation. For instance, there is a factory in Hershey PE, over a mile long, churning out hundreds of thousands of candy bars a day, operated by five people. Five people.
The idealism of the early sixties, that of a bright technological future when there would be plenty for all, has been so degraded that it now takes two people working full time to maintain a middle class lifestyle.
Thanks Les, for a thoughtful post.
One of the reason many charities exist is due to a religious affiliation. I think that provides both practical and policy problems that are un-necessary. If we targeted 160B$ at businesses with 100 or fewer employees, we could provide a 10,000$ grant for each employee newly hired. The business would have to have existed on 1/1/2009, and you would have to have safeguards about converting contractors, or firing people to rehire people, etc. to try to scam the grant. But if we invested less money in America than we did in AIG and some of these other East Coast shysters, we could eliminate unemployment in a matter of months. Thats how you create 16 Million new jobs overnight. And we better do it soon.
Even at minimum wage an employee would cost their employer over $10k a year, for a struggling business it would make zero sense to incur such a cost for short term gain. Think about this stuff.
Or he could legalize hemp, create a new green commodity market in the U.S., and create 2 million sustainable green jobs. Hemp for bio diesel, clothing, and paper would create a whole new employment sector and transform our carbon footprint in transporation.
In the first 19 days of his presidency, FDR reversed prohibition of alcohol, and created a million jobs. Jobs still here today.
You are correct. This wouldn't be a magic pill, but it would certainly help and save billions from government budgets as well as individual pharmaceutical costs. There would be several additional immeasurable (but highly positive) benefits as well.
I agree. Let's take the millions we spend on putting a 20-year old college student in jail for smoking a joint into programs to help that same kid get a job, paying for healthcare, or green energy technology, or even addiction programs. The war on drugs has been a losing cause since the day it began And "just say no" works about as well for drugs/alcohol as it does for sexual abstinance. It doesn't.
And what do you do in year two- offer the non-profits another 100K to keep these two employees? How about this: let people convert to Ross IRA's, tax and penalty-free, whats left of their 401K plans in return for the obligation they spend 10% of it this year. I think a huge flood of money would hit the economy.
I'd appreciate if they'd keep the campaign promise of letting us take $10K from our own 401k penalty free - I'd appreciate it more if they gave us a tax break on it too.
Of all the promises, that one would surely help the economy. It would help stem foreclosures and I'm sure some people would pay off credit cards (help the banks) and others would spend it.
Yes but you'd be taking capital away from investment banks and further depreciating stock prices, which would have the opposite effect of TARP and their primary economic strategy.
"...we could have turned that stimulus money into 13 million public sector jobs..."
primary lib and socialists solution to everything...
just spend more money
make government larger
what a f...ing nightmare
Other than "Eek, eek, Socialism," what's your objection? Is 13 million public sector jobs a bad idea? Not for those 13 million people; maybe it would be good for the economy; maybe it would get some stuff done that needs to be done.
But maybe it would be one more step that the evil government is taking to control your life.
Well, maybe not.
Yes, Chip. 13 million public sector jobs are a bad idea. Public sector jobs are funded by tax payers from the private sector. In order to keep those jobs, taxes would have to go up tremendously for businesses, large and small. Those businesses would have to lay off people and cut costs to pay the additional taxes. Then the unemployment goes up. Would you want the government to hire those newly unemployed and increase the taxes even more on private industry? - My business is on the brink of going under and this 'Cap and Trade' deal might just push it over the edge. There'll be another 200+ people on the unemployment line within a year if taxes continue to rise.
Is everyone so blind and can't see that supporting businesses, small AND large, with less taxes and less government intrusion will allow business to expand, hire new employees (who will pay taxes), become profitable, reduce unemployment, and make a better place for everyone? - But no - vilify the rich (most of whom I know are business owners). 'Make them pay.' Our company has donated over $50,000 to charities in previous years. Not now. We are being taxed so much, we can't afford it anymore.
Go ahead. Make government bigger. Tax the private sector more. Let the government take over the auto industry, the health care industry, the banks, etc. etc. Let's see if that will bring us prosperity.
And your brilliant solution is............................. Oh that's right, you guys never have one, you just know whatever is offered by others is wrong.
When I read things like that I am amazed. - Sorry, but is everyabody sleeping?
The money went where the RICH wanted it to go. - Into their pockets. It never was intended to create jobs. It is enough to SAY you want to create jobs. Then You go and hand the money to some billionaire and later state "I thought it would help. But now we have even more trouble. - I know another billionaier who told me he will use the next billions for the people".
Yes we YOULD have spent the money to create jobs here. And that we didn't tells us more about the intent of this government than Obamas fiery speeches. When what he says has so little to do with what he does it is his actions that MUST be the basis of judgement about him.
And if that were the case he would have failed miserably.
Don't get me wrong. McCain would have been worse. But here better means "a little less cacastrophic" - not "good".
Right, if the rich need a tax cut to expand business then they're not rich in the first place. And if they're rich, then why aren't they expanding business now? Because there aren't any profitable opportunities!!!
Business decides on capital investments (business expansion) based on whether they have a net present value (profitable). Tax rates only effect the rate of return, NOT the decision to take on the project in the first place. And remember, we're talking about things like dropping the tax rate from 36% to 33%. They've been getting lower for decades, and it's inevitable that the law of diminishing returns has taken effect. If we were dropping rates from like 90% to 45%, that'd be different.
I would like to educate you a little bit. ... At the start of the depression era, top marginal tax rates were at 79%. During the depression they went up to 94% ... Reagan brought the rates down from 69% to 50% to 28% by the time he left office. Hmmm - economic boom. Under Clinton, they went to 39.6% - GW Bush had them back down to 35%. What will Obama do?
And by the way, taxes do effect our (my) business decisions as to whether we expand or not. As tax rates rise, in order to stay profitable, we must cut costs. Employees are the most expensive part of our business.
"But as Paul Krugman points out, the danger is that the Obama administration might "find itself caught in a political-economic trap, in which the very weakness of the economy undermines the administration's ability to respond effectively."
Duh. Can you say Republican master plan? This is the only thing they did well during the previous administration - screw up something (in this case, the economy, along with several other big ticket items like leaving us with not one, but TWO misguided wars) so bad the Democrats can't fix it, even during an entire presidential term, then blame the Democrats for not being able to fix it. Never mind that the problem was caused by the Republicans.
Don't suppose I can really blame them, though - it's the only way they could even conceivably regain power.
That may way too much sense, SeriousBlack. Screw things up on purpose so you lose power in the White House, Senate, House of Reps, and the Supreme Court, and then hope you can get the power back in, what, maybe 8 years? Then what are they gonna do? Screw it up again on purpose so the Dems can regain power all over? The only people getting screwed are the middle class, and both parties are screwin'em.
The Repubs lost power because the economy tanked. Their 8 years of overspending under Bush were designed to make it impossible for the Dems to fix it because there is not enough money. Grover Norquist, the Repubs anti-tax guru, has a famous quote about starving the beast (big government) and drowning it in the bathtub. If Obama can't fix the economy, and fix it fast, he and the Dems are toast. Obama made a huge mistake in trying to be "bipartisan" , as the Repubs have a vested interest in his failure. There is no point in being "nice" to the Repubs, being nice to them. The whole idea of the perfect being the enemy of the good means that the Dems are trying to compromise on health care, jobs, etc. and the result is neither perfect nor good. Obama won a convincing mandate for change, and he's just piddling it away. How sad!
You make too much sense, Mr. Leopold. Heard you on the Thom Hartmann radio program. You were very compelling.
If you throw money at non-profits indiscriminately with the only stipulation that they hire people fast, guess what? They'll just hire telemarketers (or "phone solicitors") to help them raise even more money. As it is, that's where some 60%-80% of our charitable donations end up. Now you may think that's a productive use of public funds; I think its just as useless as Bush's rebate checks.
I was thinking something of the same thing. Most non-profits do need some extra staff -- so half the money to hire one new person, and half to put into a project. $50,000 goes a long, long way when putting on a children's festival, summer programs for inner city kids, clean-up and revitalization program for a neighbourhood, and so on. At least some of the additional jobs will be created or preserved by business generated by the program for venues, food services, paint store or whatever.
How about following roubini's idea and convert a large portion of our debt into equity? That's what jesus would do. The new ly created Equity allows investment and development and would break the capitol crunch. Might piss banks off but that is a plus.
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