Not all jobs are created equally

Not all jobs are created equally. But our politicians rarely differentiate between quality jobs that are result from the free market versus dead-end or over-paid public sector jobs. Few of the job “creation” proposals ever break down the types of jobs that will result. Although it is a fallacy that government can create jobs, they sure as heck can destroy them and make it more difficult for the private sector to generate real work.

And how about when our politicians try to "buy" jobs? Obama recently announced a $50 billion new government spending program to generate more jobs. But how many and what kind? What does each job cost? Will we see additional jobs or will Obama come back later and say that it would have been much worse if he hadn't taken action rather than being able to point to higher employment figures. Do we give the President the same kudos for a new government minimum wage job (I dare you to actually find one of these) as opposed to a recent $100,000 per year long-term job in the private sector that results in substantially more exports?

In general here is how I would size up and value new jobs created:

1) Those jobs that result in exports from the US are more valuable than those that simply make it more comfortable to live here. So a job that manufacturers and exports widgets to Europe from Indiana has more value than a new job for a massage therapist servicing yuppies in a seaside resort. America cannot continue to consume more than it produces. Our politicians give lip service to increasing exports but on the other hand they would never deny another subsidy to their local barber college either. Now the last thing I want is for the government bureaucrats and politicians to determine what we should invest in to increase our exports. They will always get it wrong. The private sector will sometimes get this calculus wrong as well, but when they do the actors tend to go out of business and lose their capital for the next bet.

2) A private sector job is more valuable than a government job. Some jobs like law enforcement need to be in the government sector, but if a job can be in the public sector or the private sector, the government job will always be more bureaucratic, more political, less customer responsive and far more expensive than if done in private industry. However, this is not what our politicians advocate. “Through the College Cost Reduction and Access Act of 2007", Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers could qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. This encourages public jobs over private jobs. Plus a government employee is beholden to the politicians that create the government job for their pay and benefits. It leads to wages and compensation that are too high. Most government jobs are overpaid (by as much as twice when considering benefit plans). So for the same price of a new government job, the private sector can create two jobs.

3) A job that will last several years is superior to a short-term job. No job is “permanent”; it is just that some jobs are more temporary than others. But most of the make-work jobs of the Obama administration are very short-lived (except those union jobs in the government which once established are nearly impossible to eliminate).

4) A new non-union job is more valuable than a union job. Unions make the US less competitive and less adaptive than non-union organizations. Show me a union organization that is competitive long-term with non-union shops? The Obama administration was supported heavily in the latest election by unions and they were paid back handsomely in the bailout of General Motors (at a cost that is currently estimated at $80 billion). The normal bankruptcy procedures were set aside and the US taxpayers and the auto unions ended up owning the vast majority of the new company. Even in Cuba the public employee unions are screaming bloody murder about their government jobs being eliminated.

5) A job that reduces our imports is more valuable than one that is neutral or increases our imports. So yes “Green jobs” are nice, but if all the new photovoltaic panels are built in China and Americans are only installing these plug and play systems at minimum wage then we are not doing much for American competitiveness (especially if the systems have a 20 year pay back). On the other hand if American scientists and engineers create new patents and designs that actually make solar electricity less expensive than fossil fuel generated power then we have really done something. But while the private sector can differentiate between these differences your average Congressman is at a loss to understand the distinction.

6) A new for-profit job is more valuable than a new nonprofit job. The nonprofit sector does good work for America but some of them are really more advocate organizations frequently pushing for a liberal agenda. They fall into the category of making life in American more “comfortable”. Our politicians don’t agree with me here and also include college loan forgiveness for those working for 501(c)(3) nonprofits. Without the discipline of the free market nonprofits are also subject to substantial abuse. "We can see that tax abuse is increasingly present in the sector," and unless the government takes effective steps to curb it, such organizations risk "the loss of the faith and support that the public has always given to this sector," said Internal Revenue Commissioner Mark W. Everson in a letter to the Senate Finance Committee detailing abuses his agency has found. In fact 8 out of 10 of the largest non-government employers in Washington DC are nonprofits. In 2005 nonprofits including their pension plans totaled roughly 3 million entities controlling $8 trillion in assets. And these nonprofits can be every bit as politically motivated as the government. And who of course is regulating these nonprofits - you guessed it the IRS.

7) New jobs that subsequently result in other jobs being created are far more valuable than jobs that are created at the expense of existing jobs. A new manufacturing job in the US requires support from the transportation industry, the telecommunications industry and various other service industries. This manufacturing job invigorates the economy and generates prosperity widely around the country. This is not the case for new government and nonprofit jobs.

8) Higher paying jobs (based on market forces rather than union monopolies) are more valuable than minimum wage jobs. Again our laws do not support this notion. Under the new “Income Based Repayment” option for college student loans the “required monthly payment is capped at an amount that is intended to be affordable based on income and family size.” So the government encourages the Octo-Mom to go to college and then employs her questionable planning skills at a low-paying job.

9) I never ever want to see another public union job created (do you think Obama agrees?). They are impossible to eliminate and keep sucking the life out of our economy for decades to come. These public union jobs come at the expense of productive private sector jobs. Public unions’ traditional strength – the ability to finance their members’ rising pay and benefits through tax increases – has become a liability. “Although private-sector unions always have had to worry that consumers will resist rising prices for their goods, public sector unions have benefited from the fact that taxpayers can’t choose – they are, in effect, ‘captive consumers.’ “ The simple but idiotic solution would be to simply make every government employee a union-paying member. And then we would have no push back on government costs at all - other than the Chinese who will stop lending us money.

10) New jobs that result in longer work weeks are more valuable than jobs that are 35 hours a week (and are still considered full-time under the US federal job statistics). The French would clearly disagree with me on this one.

11) New jobs for US citizens are more valuable than jobs for illegal aliens in the US. The liberal left that is counting on getting votes from the illegal alien sector once they become citizens (and sometimes before they become legal) may disagree on this point. Our politicians and bureaucrats simply can’t fine tune the job creation machinery to differentiate between these groups. I challenge you to get Obama to even comment on this factor.

12) A new job that creates more value than it cost is far better than a make-work job that consumes more money, time and effort than is created (almost always a government sponsored job). If it is a private sector job we see if people are willing to pay for a specific job; in government, the value of what is being accomplished and who pays for it is all very nebulous. The easiest example is government-sponsored studies like those that found that “people who exercise are less fat than those that sit on the couch”, “young children are frightened by clowns”, and “women don’t like to be told they look fat”. All of these studies “create” jobs, just not jobs with any discernable value.

A new job that is actually created and filled is a fact that we cannot argue with. But Obama’s funny numbers for ”jobs saved” - those which would have been lost if he had not acted are subject to the manipulations and big assumptions of those paid to make him look good. So relative to jobs I vote for counting birds in the hand not birds in the bush.

To create the most valuable jobs, what does the government need to do? For the most part they need to get out of the way. They need to provide stability, reduce taxes, reduce regulations, and stop their “class warfare” rhetoric. If Obama would simply play more golf we would see entrepreneurs hiring more.