Private sector adds jobs. You helped. Really!
Through September, taxpayer-funded jobs programs put 240,000 Americans back to work, often in the private sector. With unemployment stuck at 9.6 percent, should Congress subsidize more private-sector jobs?
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Helping small businesses overcome their skittishness about the economy has been an unexpected benefit of the program since most of the hires are in the private sector, say advocates.Skip to next paragraph
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"The focus has been on encouraging small businesses to take risks and hire people," said LaDonna Pavetti, a poverty and welfare expert at the Center on Budget and Policy Priorities, a Washington economic-policy think tank. "We hope those positions will lead to permanent jobs."
But government subsidized job programs don't have a particularly good track record for boosting long-term employment. For one thing, they're too small: Even the massive New Deal employment programs couldn't pull the United States out of the Depression. For another, they're not as effective as training and job-search programs in keeping people employed, according to a study by David Card, an economist at the University of California, Berkeley, and German economists Jochen Kluve and Andrea Weber.
"What causes a business to hire is when they can take advantage of a business opportunity," said James Sherk, senior policy analyst in labor economics for the American Heritage Institute, a Washington think tank. "A temporary subsidy is not enough to create expansion."
Even though the jobs programs do not significantly reduce unemployment, they do inject stimulus into communities.
"People who are unemployed or on [welfare] generally spend what they earn, and they spend it quickly," said Trent Rhorer, director of San Francisco's Department of Human Services.
Some $55 million in wages have been paid out to the 3,650 workers in San Francisco who've participated in the city's subsidized jobs program over the past 18 months. But the program, which Mr. Rhorer said has helped about 20 percent of its welfare caseload leave aid, stopped taking applications at the end of July, anticipating that funding could end in September.
"We figured two months of work was worthwhile for the company and employee," Rhorer said. "One month probably wasn't."
Back in Rhode Island, Arturo Santos is happy to be working, even if his job outlook is uncertain. "It just feels good to be out doing something again," he said.