5 Worst So-Called Job Creation Ideas From the GOP
Washington, nearly a year after the 2010 election that was supposedly all about jobs, finally seems to have woken up to the fact that the economy is still in the dumps and Americans are sort of angry about it.
Make that very angry. And with Republicans in charge of at least part of Congress as well as many state governments, they know they're about to take some of the blame for the continuing lack of any policy ideas on job creation--recent polls show only 24 percent of the country approves of how they're doing their jobs. Not to mention the GOP primary field is loaded with contenders claiming they have the magic solution to the jobs problem.
So what is this masterful GOP jobs agenda? You won't be shocked to hear that it's more of the same—more deregulation, more tax cuts, more whining about deficits. “House Republicans are planning votes for almost every week this fall in an effort to repeal environmental and labor requirements on business that they say have hampered job growth,” says the Washington Post.
But since you're about to be hearing these same ideas, with minor variations, over and over again, we thought we'd count down the five worst ideas, and arm you with some reasons why they're so very bad.
Labor Day seems to be the locus for all of these “jobs agendas” -- Obama's promised his after Labor Day, and GOP presidential candidates seem to be gearing up for that date as well.
But they seem to have missed the point of the holiday; that is, if their agendas are to be believed. The House GOP has taken aim at organized labor as well as Obama's National Labor Relations Board, and we know that right-wing governors around the country have been slashing public sector union jobs as part of their misguided austerity agenda.
The Republican party would like nothing more than to break organized labor completely; introducing an agenda around Labor Day would just be a nasty little bonus.
The Washington Post reports that Eric Cantor plans to try to overrule an NLRB ruling that keeps airline manufacturer Boeing from transferring its assembly line to South Carolina from Washington State, where union workers have gone on strike four times since 1989 over things like excessive overtime, safety precautions and health care benefits. South Carolina is a so-called “right-to-work” state where the workers would be nonunion (and paid less).
As Josh Eidelson wrote:
“It’s the latest round in a decades-long labor struggle. At stake: Do workers at Boeing get to shape their own future, and Boeing’s? Or do they just have to embrace—or rather, submit to—the corporation’s plan?”
Union workers make more money, have more job security and better benefits, and thus contribute more to the economy. While no one is denying that South Carolina's workers need jobs, the GOP's siding with Boeing isn't about its deep desire to employ South Carolinians. It's about corporations' ability to be able to pack up and move to wherever the labor costs (read: people) are cheapest, with little regard for the employees left behind. That's hardly a jobs agenda.
Then, on the House's agenda this winter, attacks on a rule proposed by the NLRB that would streamline the elections process for unions, cutting down on the endless delays that all too often stop an organizing drive in its tracks. This proposal was one of the quiet ways in which the Obama NLRB was doing its job—protecting workers against the powerful companies they work for. Cantor and his crew want to go back to the days when corporations can endlessly delay union elections while spending money on anti-union propaganda.
How is any of this job creation? It's not. Pat Garofalo at ThinkProgress wrote:
“Neither of these GOP measures will do a thing for job creation, but they will push unionization rates even lower, even though falling rates of unionization are correlated with plummeting middle-class incomes and skyrocketing income inequality.”
4. Free-trade agreements
The idea that so-called free trade creates jobs has sadly gone bipartisan, from Bill Clinton's pushing for NAFTA back in the '90s to Barack Obama's embrace of the Colombia and Korea free-trade agreements.
Nothing could be further from the truth.
"Free trade" allows corporations to manufacture their products wherever they can find cheap labor and few regulations, in places where workers have no rights and protections, where overtime pay and child labor laws are a dream. Meanwhile, it pushes down wages for workers here in the US who are told they must remain “competitive” with workers who don't have a comparable cost of living, and undermines the gains the labor movement made over the past century. If you think a plant moving to South Carolina to avoid a strike is bad, what about moving it halfway around the world?
“A May report from the liberal Economic Policy Institute (pdf) finds that the North American Free Trade Agreement (NAFTA), which was primarily touted as a job creator, has cost the US 682,900 jobs, 61% of them in manufacturing,” Daniel Denvir reported.
And the Korea and Colombia deals are set to do the same: send manufacturing jobs overseas. Yet you'd never know it from the way these deals are touted by politicians from both parties. As Marcy Wheeler noted of Obama's speech on trade:
“Aside from the fact that a lot of what we’ll be exporting will be American-style fraudulent finance, not manufactured goods, his use of the term is all the more cynical given the likely reason he used it: because of the polling showing near unanimity that the US should make things again–like the 94% of Americans polled who think creating manufacturing jobs here in America is important. That is, he’s trying to co-opt the almost complete opposition to this policy–which almost certainly wouldn’t create any new manufacturing jobs here in the US–as a way to try to claim that trade deals that will result in a net loss of jobs will instead create them.”
Free trade is what killed those manufacturing jobs Americans so desperately want to see again, as corporations continued the race to the bottom, seeking the cheapest labor costs around the world. Free trade isn't going to bring them back. Once again, support for trade agreements is corporate welfare at its finest, not industrial policy.
3. Lowering business taxes
It should be obvious that tax cuts aren't creating jobs. We've seen almost nothing but tax cuts in the past 30 years, particularly on businesses and the rich, who are supposedly job creators who must not be angered at any cost. Yet we remain in a jobs crisis even as corporate profits have returned to high levels and the rich control ever more of our wealth.
Just in case you weren't already convinced that taxes were quite low enough on the rich and on businesses, Bruce Bartlett (a former adviser to Reagan, Bush I and Ron Paul—in other words, no raging liberal) noted in the New York Times that the main factor holding back hiring “is a lack of sales, as monthly surveys by the National Federation of Independent Business document.”
In other words, it's not taxes or labor costs but the fact that no one has enough money to buy anything that's keeping businesses from hiring.
As Dean Baker pointed out, most businesses don't actually pay the 35 percent marginal tax rate that conservatives so love to argue is punishingly high.
Meanwhile, a new Congressional Budget Office report makes the point that the tax cuts portion of the American Recovery and Reinvestment Act (also known as the stimulus bill) were far less effective at job creation than the direct purchases of goods by the government and direct payments to people, such as food stamps and increased unemployment.
We know this already; the well-off are doing just fine in this economy, and businesses are reporting record profits under these purportedly too-high tax rates. The people who continue to suffer are those who are still not being hired (and who, of course, are not paying much in taxes since they're not taking in anything). And as long as we have high unemployment and low wages, we'll continue to have low spending, less sales, and no incentive for businesses to add jobs.
And let's not even get started on terrible ideas like the tax holiday on overseas profits “brought home” by multinationals, shall we? Talk about moral hazard and perverse incentives; giving corporations tax breaks on money they keep offshore costs the government money, provides an incentive to keep profits offshore until the government can be bullied into another tax holiday, and the last time around, back in 2004? Cost the US jobs.
2. Repeal EPA regulations
Republicans like to pit the economy versus the environment, as if it's simply inevitable that any concern for clean air and water is automatically going to hurt business and kill jobs. They've repeated the term “job-killing regulations” until no one even questions the idea anymore.
The problem is, it's just not true.
As Laura Clawson at Daily Kos points out:
“The thing of it is, a move to a clean energy economy or to any of a number of safer, better practices in other areas would create jobs, but those are potential jobs. Meanwhile, corporations and politicians that want to keep doing the same old thing point to existing jobs and claim (rightly or wrongly) that these jobs are threatened by increased regulation, with no word of the jobs that will be created in new fields.”
She's discussing a new study, by Northeast States for Coordinated Air Use Management (NESCAUM), which reports that a 10-percent reduction in carbon pollution from all fuels would correlate with an increase in jobs. Not only that, but a significant increase in household disposable income. The standards the study suggests are similar to ones already in place in California, which leads the nation in terms of environmental regulations.
Meanwhile, there's no guarantee that eliminating regulations would preserve the existing jobs, let alone create new ones. Just like low taxes, it's simply an ideological claim that keeps right-wing politicians hammering the same ideas they've been hammering for the last 30 or more years—as employment has fallen. As Adam Hersh, an economist with the Center for American Progress points out:
“The Republican 'jobs agenda' presents a litany of bills that in fact provide explicit subsidies for corporate oil, coal, and gas producers. Those subsidies, and the stranglehold big oil, coal, and gas companies have on national energy policy, are blocking the development of a fledgling advanced technology manufacturing industry that will create jobs right here in the United States: the renewable energy industry.”
1. Cut the minimum wage
Michele Bachmann's become the GOP posterchild for advocating this terrible idea; cutting the minimum wage to make the US “more competitive” with overseas labor.
The Associated Press reports:
"The Minnesota congresswoman told supporters at a packed sandwich shop that the corporate income tax needs to be reduced because companies are moving to other countries to save money. She was later asked by a reporter whether changes to the minimum wage should also be considered to balance the cost of labor here and overseas.
'I'm not married to anything. I'm not saying that's where I'm going to go,' she said."
It can't be said enough how wrongheaded an idea this is. First of all, as noted above, the problem with the US economy right now is that not enough people have money to spend. The ongoing downward pressure on wages from the cumulative effects of union-busting, trade deals and long-term unemployment has left too many Americans with too little money in their pockets even if they do have jobs, and the lack of spending is the reason companies aren't hiring. Consumers, as Robert Reich points out, are the job creators.
“Every CEO of every company that continues to squeeze payrolls (Verizon, are you listening? Ford?) needs to understand they’re shooting themselves in the feet. Where do they expect demand for their products and services to come from?”
And it's fitting that just as Obama announces that labor economist Alan Krueger will be joining his team of economic advisers, the minimum wage comes up for discussion again. Pat Garofalo again:
“...almost all of the economic research on the subject shows that the minimum wage has little to no effect on employment. The most well-known researchers on the subject — David Card and Alan Krueger — examined a minimum wage increase in New Jersey, and found that 'employment actually expanded in New Jersey relative to Pennsylvania, where the minimum wage was constant.'”
Cutting the minimum wage would add still more downward pressure on wages, continue the hollowing out of the middle class, and keep the economy stagnant. Seventy-three percent of the jobs created since the so-called “recovery” began have been low-wage positions; the economy continues to struggle, and as Bartlett noted, labor costs aren't the problem. Low wages are.
It's not surprising that nearly every “job creation” tactic thought up by the Republican party is corporate welfare barely even thinly disguised. What is surprising is how many of these ideas have been and may continue to be adopted by Democrats who fear the ideas that would actually work are politically untenable.
That's why it remains vitally important to point out how wrongheaded each and every one of these policies are. Put together, they're a recipe for continued economic stagnation and increasing inequality.