Why ‘Job-Creation’ Doesn’t Work

By Kevin D. Williamson

Thursday, September 09, 2021

 

‘The best social program is a job,” Ronald Reagan famously declared, and though that dictum speaks to our collective aspirations of self-reliance, the fact is that a job is not a social program.

 

That is obvious enough, but we need to really understand why and act on it.

 

Poor people are, socially and politically, a problem — the softhearted among us are moved by their privation, while the less naturally sympathetic may simply object to other people’s poverty intruding into their comfortable lives through crime, public squalor, panhandling, and the like. The main streams of both political parties operate from the belief that the cure for the problem of poor people is jobs for poor people. A good job, this theory goes, takes that poor person off the books. The unspoken assumption here is that people are liabilities rather than assets.

 

Sometimes a job really is the answer, and sometimes it isn’t. If we misunderstand the relationship between jobs and poverty, it is because we misunderstand both jobs and poverty.

 

Jobs are a means, not an end. Starting a new electric-car factory may mean hiring a bunch of people, but the point of an electric-car factory is not to “create jobs,” as the politicians like to put it — it is to create electric cars. The point of a job is not the wages and benefits it gives the person who holds it, but the value that person produces. The job-holder’s paychecks are a byproduct of his output. If we drafted 100 percent of the workforce into the army, we’d have no unemployment — but also no food, no houses, no smartphones, etc. I am always happy to learn of a farmer who is making a good living, but the social value of the farm is its produce. The social value of Apple isn’t the company’s payroll or its philanthropy, but its telephones and computers.

 

It is the case that people with good jobs — or with any job — are less likely to require social programs than are people without them. A 2016 study put the number of Americans with full-time jobs that left them in the category of “working poor” at 3.4 million, i.e., a little bit more than 1 percent of the overall population and less than 3 percent of those with full-time jobs.

 

For perspective, we could bring all of those people out of poverty for relatively little money — about a third of what we spend on interest on the debt each year. (For my progressive friends who roll their eyes at us killjoy budget hawks: Imagine what could be done with the hundreds of billions of dollars we spend each year on interest payments.) In reality, we spend a lot more on various kinds of programs to support people who have relatively little or no regular work. Very high-income households typically have two full-time workers in them (and sometimes more), while poor households have on average fewer than one full-time worker.

 

“In that case,” says my inner country-club Republican, “put them to work!”

 

And putting them to work would, of course, be the best outcome in a great many cases. But the problem is more complicated than that.

 

President Joe Biden, like many presidents before him, is pressing for a large public-works (“infrastructure,” promiscuously defined) program that would create a lot of jobs. But the kinds of people who would be able to fill those jobs are not, for the most part, the kinds of people who are languishing in various forms of public dependency at various levels of poverty.

 

Biden-style infrastructure programs or Green New Deal fantasies are not really about putting the poor and the unemployed to work, at least not in anything more than a rhetorical sense; as an economic matter, they are mostly about raising the incomes of people with incomes that already are relatively high, particularly skilled industrial and technological workers, unionized manufacturing workers, and managers both in the private sector and in adjacent public-sector institutions.

 

And, hurray for that — every time a factory worker makes enough money to get himself a new KingQuad, a capitalist angel gets his wings. But there is also an element of self-interest that shapes these efforts: Ask a guy with an MFA what the world needs and he’ll tell you it is more highly paid jobs in the arts.

 

The problem with job-creating schemes is that the workers they do the most for already have a lot of good options, if not an embarrassment of riches. As the New York Times reports, one of the main obstacles to President Biden’s infrastructure plan is that there are not enough available workers to fill the jobs it would create. As the Times notes, there are $50-an-hour jobs going unfilled in Nebraska, where $50 an hour goes a long way. Think about that: We are trying to pass a program to create jobs, and the main economic obstacle to its success is that there aren’t enough people looking for jobs.

 

The reason you have people sleeping in subway stations in New York City or camped out in Austin is not mainly economic. Yes, housing is expensive in those places, which is why many people live in situations that are far from ideal and very far from comfortable. But people who are sleeping on the street mostly are doing so because of mental-health problems, not because of economic problems. That is why you will find people sleeping on the street even when there are shelter beds available.

 

The employment situation is, to some less dramatic extent, the result of a similar phenomenon. We don’t have enough workers to do highly paid work, and we have a lot of people who are suffering in ways that could be alleviated by highly paid work. We probably could connect some of those people with some of those jobs if we did better with vocational education and other forms of job-training, and if we had a culture that did not sneer at people who do manual labor and consider them losers. But I am not convinced that this would change things for the majority of people who are in persistent poverty.

 

A few years ago on a trip to St. Louis, I spent part of the day interviewing the chairman of a large industrial concern who complained that while his company could hire engineers relatively easily (though not cheaply), managers increasingly found it difficult to hire forklift operators and similar workers, even at high wages. I spent the other part of the day interviewing desperately poor people less than ten miles away whose lives would have been completely changed by half the money they could have made driving those forklifts. But when I told them about those jobs down the road, I may as well have been recommending an exciting new opportunity on Mars.

 

You need a license to operate a forklift. The course costs about $100. But it wasn’t the lack of a license, or the lack of $100 for the course, that was keeping those people out of those jobs.

 

This is the point in the column where I am supposed to give you a policy solution. But there isn’t one. The best we can do is to disentangle several strands that we have allowed to become knotted up.

 

Our job-creating energies are largely directed at jobs that pay well, meaning mostly jobs for college-educated people or skilled blue-collar workers. We can artificially inflate wages in certain situations, but no president is going to brag about creating 1 million new jobs on the overnight shifts at convenience stores (remember the Democrats’ getting all snooty about “McJobs”?), and there probably isn’t any plausible economic arrangement in which low-skill retail or hospitality work is going to enable someone to raise a family in comfort. When it comes to “creating jobs,” the rich get richer, and the doing-pretty-well do better. If we want to subsidize the consumption of people in low-wage jobs, we probably should do it in the most straightforward way possible, i.e., by sending them money rather than by trying to trick or force their employers into paying them at the level we would prefer.

 

We should encourage people to work, and, in certain situations, we should require them to as a condition of receiving public assistance. But we are not going to replace social programs with jobs — if our economy were growing three times as fast and our education system were ten times as good, that still wouldn’t work. We are going to have social programs, and they are going to cost a lot of money. There are better and worse ways, economically and morally, to go about designing and implementing such programs. But we should abandon the fantasy that jobs are the solution for people whose problems are not, at root, economic.

 

Whatever the next jobs report says, we aren’t taking these people and their problems off the books.