MEDIA RELEASE: Report: Senate, House jobs plans "will do little to create jobs"

North Carolina needs a truly bold job-creation strategy, says a new Budget & Tax Center paper

RALEIGH (June 10) -- State lawmakers' plans to stimulate job growth are neither bold enough nor targeted well enough to make a real impact on unemployment in North Carolina, a new report says. Instead, state legislators should consider more aggressive job-creation tools.

"If you're putting out a campfire, a little bit of water might work," said NC Budget & Tax Center analyst Alexandra Forter Sirota, the report's author. "But if your house is on fire, you can't fool around - and our economic house is still on fire."

The report compares the North Carolina Senate's jobs plan with the one put forward by the House. Neither plan, Sirota writes, goes far enough.  Also, the plans miss the mark on policies to encourage new investment.

"Proposals in the Senate and House to stimulate growth by targeting small business will do little to create jobs because of the limited size of the credit, caps on available funds for the program and the firms that will be targeted," the report says.  

An across-the-board tax cut proposed by the Senate is "by far the least effective tool to stimulate growth," the report says. In the current climate, businesses will be less likely to ramp up production and hire workers.

A proposed House tax credit avoids many of the problems with the across-the-board cut, but is also not large enough to encourage employers to make new hires. Also, by targeting only small businesses that have shown a profit, the House proposal limits its usefulness.

"Growth of our state's workforce has continued at a steady clip," said Sirota. "Without aggressive policies to create jobs now, long-term unemployment will continue to be a drag on our economic recovery and cause pain for working families."

Lawmakers should instead consider effective direct job creation tools, such as a Small Business Job Growth grant program, writes Sirota. This program would provide a direct subsidy of $10 per hour to the wages and benefits for jobs newly created by employers.

Benefits of such a program include not only creating temporary jobs where workers can gain experience, but permanent ones where workers can build long-term connections to work. Freeing up money from job creation strategies that have proven ineffective, such as the across-the-board tax cuts, could fund such a program.

Policymakers should also focus on preserving jobs in education, health and public safety, the report says. Doing so "will allow public-sector workers to maintain their spending activities in local communities," stimulating the economy and allowing recovery to continue.

The report, "Creating Jobs in the Private Sector," is available online at: http://www.ncjustice.org/?q=node/533

FOR MORE INFORMATION, CONTACT: Alexandra Forter Sirota, 919.861.1468; Jeff Shaw, Director of Communications, 919.863.2402 (office), 503.551.3615 (mobile).

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