Creating jobs is harder and slower than politicians will admit

Despite being the central theme of every politician’s key talking points, creating jobs is a more difficult process than lawmakers admit.
two help wanted signs seen on a restaurant wall
Photo by HABesen/iStock

“Jobs, jobs, jobs.”

That’s the campaign theme of every political candidate. The U.S. economy simply does not have enough jobs, and most people believe that government should do something about it.

While several ways have been proposed to create jobs, they may be based on a faulty understanding of the problem.


The economy is experiencing what has been called the “Great Recession,” with an estimated 17 percent of the work force unemployed or no longer looking for work.  This recession may have more in common with the Great Depression of the 1930s, when unemployment reached 25 percent, than it does with other, more recent recessions.

Most recessions are caused by what economists call “the business cycle.”  Occasionally, the economy gets out of balance: purchasing slows, prices stall or fall and workers are laid off. Under these conditions, the economy will try to self-correct, usually with a boost from government spending to partly replace individual outlays.

Because that is what normally happens, many people expect it to happen this time and are distressed that it’s not.  Politicians get the blame, partly because they always claim the credit when the economy is going well.

Some economists believe this is a so-called “structural” recession, caused not by the business cycle but because we have bent that cycle totally out of shape.  That is why it is similar to the Great Depression.

This recession started when the housing market collapsed because many people could no longer afford to make mortgage payments on their homes.   Mortgage balances were higher than the value of the homes mortgaged.  In fact, excess mortgage lending permitted people to live beyond their means, which many compounded by overuse of credit card debt.

Eventually, too many Americans lacked the money to pay their bills.  No turn of the business cycle could fix that.


In the current situation, government is expected to step in and help create jobs.  President Barack Obama calls this giving the economy a “jump start.”  That would mean that the economy restarted instantly like a car motor. But, recovering from a structural recession is more like pulling a car out of a ditch.

One big problem with the government taking the initiative is that it has behaved just like the rest of us — living on debt.  The federal government cut income taxes, began a prescription drug benefit, and financed wars in Afghanistan and Iraq, all without asking for any contribution from the public.  It was all done by debt, and the payments, if the debt is not cut, could overwhelm the federal budget.


If there were to be more government spending on jobs, with no more debt possible, it would have to be done by raising taxes.

That approach would be consistent with the tradition of government hiring more people and paying the private sector to carry out public works.  That’s what the federal government did during the 1930s, and it worked – quite slowly.  In fact, when funding was cut back midway through that recovery, the economy took a second nosedive.

The reverse approach is for government to cut taxes, leaving more money in the pockets of individuals.  Presumably, they would spend more, stimulating the economy.  That could work faster, but there is no assurance that money would be spent productively rather than on, say, more imports or bigger executive paychecks. And it might not be enough.

The first way is supported by Democrats, and the second has been traditionally the Republican method.  President Obama has rolled funding for his jobs proposal into a broader plan to cut the deficit.  He announced Monday that he wants to raise money for job creation and deficit reduction by a combination of tax increases on upper income people and spending cuts.  He said that he has included some measures that the GOP has supported in the past.

But a growing part of the Republican Party and all of the candidates for its presidential nomination believe that government itself is the problem.  Its role should be reduced, not expanded, and the debt lowered by cutting government programs.  They say that taxes should not be raised on the wealthy, who create jobs. That suggests that there would even less job creation than at present if taxes were raised on the wealthy.

Though many believe that government has poured endless streams of money into the economy, Republicans in Congress have been effective in blocking many  Democratic spending proposals.  They suggest that the economy will cure itself and that, without government spending, people will rebuild the economy themselves.  This process, if it works, would take several years.


Gordon L. Weil

Gordon L. Weil has been active in politics, journalism, publishing and energy consulting. A graduate of Bowdoin College, he has a master’s degree from the College of Europe (Belgium), and a Ph.D. from Columbia. He is an Army veteran. He was a top aide to U.S. Sen. George McGovern during his run for president. In Maine, he served as Commissioner of Business Regulation, Director of the Office of Energy Resources and the state’s first Public Advocate. He was a Harpswell selectman. He led the negotiations that created the unified New England power grid and chaired the national organization of state energy agencies. He reported for the Washington Post, Newsweek, London’s Financial Times, the Wall Street Journal and WNET (New York). His weekly commentary has appeared in Maine newspapers since 2008. He has written or edited 16 books or collections ranging from the biography of Sears, Roebuck to the three-volume U.S. Supreme Court original jurisdiction decisions. His company, sold in 2005, was the largest publisher of state government regulatory codes.
Previous Post
Exterior of the Maine State House during the winter with trees missing all their leaves.

Lawmakers move to take politics out of grant awards

Next Post
The Megunticook East dam

The story behind the dam story

The Maine Monitor has five newsletters to keep you informed about Maine.