January 12, 2010
Although there was some progress made recently in reducing the unemployment rate, it still remains stubbornly high. Disappointment has been expressed with the federal stimulus plan's success - or lack of success - in reducing unemployment. Consequently, ideas are being floated about what more the government could do to stimulate job creation. Any ideas?
Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"Well, first of all, it's important to remember that the stimulus plan actually had a number of goals, one being to help low-income households survive during the recession, another to help states balance their budgets. Neither of those goals really focused on creating jobs. Now, there is a component on infrastructure spending - roads, bridges, grid projects, energy - that will create jobs. The problem there is that most of that spending hasn't kicked in yet. In fact, recent estimates are that only about 26 percent of that money has been spent. Now, if the government does want to do more to create jobs there are two ways they could go. They could directly hire people. The government could go out there and hire people to do things. This is essentially what we did in the 1930s. Opponents say that would create make-work projects. The other way is that the government could increase incentives for businesses to hire workers by doing things like reducing the payroll tax, a tax credit for hiring new workers or a direct reduction in the corporate income tax. So there are some ideas. It will be interesting to see what direction, if any, Washington moves in."
Posted by Dave at January 12, 2010 08:00 AM