President Barack Obama is poised to give a national speech next week on his plan to create jobs. One would say, “It’s about time” given the fact that the unemployment rate has not been so high for such a sustained period of time since the Great Depression.
In his two and one half years in office, he has focused more on expanding the size and scope of the federal government than private-sector job creation. The question is whether his new focus will finally result in job growth.
According to news reports, the president will call for a program that emphasizes tax credits for new hires, enhanced infrastructure spending, and yet another extension of unemployment benefits.
Properly developed, some of these ideas have merit but the key fact about the speech will not be what he says, but what he won’t say.
Tax credits for new hires have merit in some cases such as hiring unskilled workers or the otherwise hardcore unemployed. The credit reduces a firm’s marginal costs allowing the worker to gradually become more productive. A credit is unlikely to employ the more skilled workers who have been laid off because of poor business conditions.