Governors don't create many jobs. Can presidents?
President Obama's jobs programs may put people to work. But stimulus has been expensive and hasn't jump-started the economy.
Elected officials always claim credit when good things happen to the economy.Skip to next paragraph
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And there is a connection between the powerful engines of government policy and the jobs that appear afterward. From 30,000 feet away, it looks as solid as a jet contrail. But the closer one gets to it, the more tenuous that connection looks, especially in the short term.
That hasn't stopped candidates from taking credit anyway. On Wednesday, three Republican presidential candidates sparred over their records of job creation as governors. On Thursday evening, President Obama was scheduled to unveil his much anticipated jobs program.
But really, is there much that any elected official can do?
“On the margins, politicians can have an influence,” says David Neumark, professor of economics and director of the Center for Economics and Public Policy at the University of California, Irvine. But “there's a lot of blame and credit that get thrown around and taken that are not merited.”
The easiest example is the governors, whose powers over the economy are limited. When Texas Gov. Rick Perry pointed to his state’s job creation in Wednesday's GOP debate, rival Mitt Romney, former governor of Massachusetts, was quick to point out that Texas has benefited from an oil boom and a low-tax, business-friendly environment long before Mr. Perry came on the scene.
So what did Perry’s presence add?
In the four years between July 2007 and July 2011, Texas employment grew 2 percent while the US employment fell 4.7 percent. But most of that was due to Texas, not Perry.
His policies accounted for less than 0.1 percent of Texas’ job growth, calculates Harvard economist Edward Glaeser in a Boston Globe column Thursday. “While Perry can claim to be a faithful representative of the Texas model, he hasn’t outperformed his state’s history,” Mr. Glaeser writes.
Mr. Romney’s effect on Massachusetts’ economy during his tenure was actually negative: -1.5 percent per year; worse, if Glaeser tries to isolate the Romney effect. Utah Gov. Jon Huntsman beats both men on job creation. Glaeser figures he’s associated with a better than 1 percent rise in employment and a 1 percent decline in unemployment in his state.
That's nice, but state economies are influenced far more by the national economy and the industries and resources peculiar to their region. The effect of governors' tax credits, enterprise zones, and other job-creating policies “run from no effect to smallish effect,” says Mr. Neumark,.
A president is far more able to create jobs than governors, in part because he can spend a lot more money – as Obama has done and President Bush before him. Their stimulus programs kept the economy from losing another 8.5 million jobs, according to economists Mark Zandi of Moody’s Economy.com and Alan Blinder of Princeton.