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WHAT OTHERS SAY: 'Jobs' is the magic word, but there's no magic bullet

Monday, August 22, 2011 | 6:00 a.m. CDT

Gov. Jay Nixon's press office announced last week that a "premiere international brokerage and consulting firm" had listed Missouri as one of its "Top 10 Pro-Business States for 2011."

This premiere firm turns out to be a small company in suburban Chicago called Pollina Corporate Real Estate. It is one of dozens of companies that advise businesses on relocation and real estate deals.

There are lots of business climate studies, ranging from magazines and university studies to annual reports from the U.S. Chamber of Commerce and think tanks like the Tax Foundation. None of them contain any magic bullets, except that a well-qualified workforce is at the top of most lists.

Jobs, or the lack thereof, promise to be the No. 1 issue in next year's elections. Gov.  Nixon has been known to fly across the state to announce the addition of as few as 15 new state-subsidized jobs.

Lt. Gov. Peter Kinder, Mr. Nixon's putative Republican opponent in next year's election, even used the occasion of a controversy over his relationship with a former exotic dancer to note that "50,000 fewer Missourians are employed now than when Jay Nixon took office."

But the sad reality is that creating jobs turns out to be far more difficult than creating studies about creating jobs.

Texas Gov. Rick Perry, in his first days as a Republican presidential candidate, has been boasting about his record as a job creator. Indeed, fully a third of the jobs created nationwide since the alleged end of the recession in 2009 were created in Texas. The median hourly wage in Texas is $15.14, which works out to $31,512 a year, usually without benefits. These days that looks good to a lot of people.

Texas combines geography (ocean ports plus sunshine plus Mexican immigrants to hold down wages), no state income taxes, oil and gas revenue, lax business regulation, low union membership rates, strict limits on tort lawsuits plus generous incentive programs to make itself attractive.

Few states can match all of that, nor should they — property taxes are high in Texas and its public schools are awful — but for laissez-faire capitalists, Texas can't be beat.

President Barack Obama, on the other hand, spent three days on a Midwest bus tour last week touting payroll tax cuts for businesses and unemployment insurance benefits for the long-term jobless to boost spending and trigger hiring. He wants to overhaul the U.S. patent system to encourage entrepreneurs complete foreign trade deals to open up new markets.

Everyone has a jobs program. Unfortunately, they're all based on old economic models. It is now abundantly clear that the U.S. economy has undergone a profound structural change in the last 20 years.

Technology and globalization have wiped out millions of jobs. The collapse of the housing market has devastated the home construction industry, long the key indicator of economic recovery. Pension costs and the reality of long-term debt tied to caring for an aging population have cost 550,000 public sector jobs.

The McKinsey Global Institute reports that after every U.S. recession between 1945 and 1990, employment recovered within six months after gross domestic product recovered. It took 15 months after the 1990 recession and 39 months after the 2001 recession.

At current rates, it will take at least five years before unemployment levels get back to what they were in mid-2007. And that's a best-case scenario.

Restructuring America's economy in a way that doesn't leave millions of people behind will be a long slog. It will require shared sacrifice and open minds. Anyone who says otherwise is, to be kind, badly misinformed.

Copyright St. Louis Post-Dispatch. Reprinted with permission.


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