This past year has been devastating for many American businesses and families financially. With government-mandated lockdowns, unemployment has risen as businesses reduced their labor force or closed completely. We can argue on whether or not the lockdown mandates were necessary. Still, no matter which side of the argument you are on, it doesn’t change the fact that the lockdowns contributed to the current economic crisis we face in America.
Last week the NY Times wrote an article titled, “Should the Fed Guarantee You a Job?”. This isn’t the first time this idea has been proposed, but it is becoming highlighted due to the mass amounts of jobs lost from the pandemic. The current proposal is that the federal government would provide taxpayer-funded training for low-income or unemployed households. At the end of the training, participants would be guaranteed government jobs.
Let’s look at the benefits of such a program. The most obvious is that it would provide jobs to the unemployed, providing them with income. It would also provide the newly employed with purpose and improve their emotional health. Another benefit mentioned by proponents for such legislation is that it would increase tax revenue while providing savings on unemployment and food stamp programs.
Improving someone’s financial and emotional health are certainly noble goals, but it’s not that easy. I wish everyone in America could have a good-paying job. Some of these proposals have good ideas in them. However, it’s important to note that these proposals are for federally funded jobs, not private-sector jobs. These proposals use taxpayer dollars to pay for training where an individual would be guaranteed a government job, which would cost additional taxpayer dollars on an ongoing basis. While job creation is a wonderful thing, additional dependency on the government and unnecessary job creation is crippling to an organization’s financial viability, including the government. Our federal budget is already at a critical overspending level. The additional deficit will not help the long-term sustainability of our country. These proposals to help one group of people end up hurting all groups of people. This type of legislative proposal isn’t new, but each time the pilot programs have failed. Why? It’s not sustainable.
I think there can be a sustainable solution beneficial to both the unemployed, low-income household and the American taxpayer. First, the federal Work Opportunity Tax Credit allows employers that hire individuals with certain personal characteristics to claim a tax credit. This is beneficial to the business and some qualifying individuals but doesn’t help provide the necessary training for other needing individuals. Second, in Pennsylvania, we have EITC (Educational Income Tax Credit), which provides tax credits to eligible businesses contributing to a Scholarship Organization, an Educational Improvement Organization, and/or a Pre-Kindergarten Scholarship Organization. EITC scholarships have household income requirements to qualify to receive financial education aid. Businesses and individuals can receive tax credits by contributing to qualifying scholarship organization which helps lower-income household children participate in high-quality education. It is a very beneficial program to help make education accessible to all, but it doesn’t address the current unemployment need.
What if we tweaked these two concepts and developed a job training program? What if a business or individual could contribute to a 501(c)(3) organization that provides job training services to low-income households and receive a tax credit for it? There would have to be details outlined to qualify for such a program. It would provide low-income households with the opportunity to learn a skill necessary for steady income provided through private work. You don’t have to search very hard to find that we have a shortage of skilled trade labor in our country. Could this solution also help us close that gap?
It’s important to note that according to our constitution, the federal government exists to “provide for the common defense” and to “promote the general welfare.” These words weren’t chosen accidentally. The distinction between providing and promoting is important. Guaranteeing government work would be providing, whereas a federal tax credit for a qualifying training program would be promoting.
“We cannot solve our problems with the same thinking we used when we created them.”Albert Einstein
We can’t expect to solve our current economic crises through more government mandates or government-provided money. The solution needs to be promoting the American people’s efforts who are working together to rebuild our economy.