Policies to Save and Create Jobs

Strengthen the Safety Net

On December 26, 2009 the Emergency Unemployment Compensation (EUC) program which provides additional weeks of federally financed unemployment benefits to workers who have exhausted their regular 26 weeks of benefits will expire.  With unemployment expected to move above 9% in 2010 a significant number of Pennsylvania workers will likely exhaust their unemployment benefits before the labor market begins adding jobs at a pace sufficient to drive down joblessness.  Failure to extend the EUC program would hurt demand and weaken the economy.  Also set to expire in December are an increase unemployment checks of $25 dollars, the exemption of the first $2,400 of unemployment compensation from federal taxation, and subsidies designed to help laid off workers maintain their health insurance.  Assistance to unemployed workers remains one of the best targeted and most effective means of boosting demand.

Another critical piece of additional federal assistance that will be needed in 2010 includes an increase in nutritional assistance.  The United States Department of Agriculture reports that more than half a million Pennsylvania households have difficulty putting enough food on the table.   According the Pennsylvania Budget and Policy Center (PCPC) the demand for food stamp assitance is up sharply over the course of this recession (see more from PBPC on the impact of the recession on the safety net in Pennsylvania).  Increases in food aid are good for public health and well targeted.

Pay People to Work Shorter Hours

Dean Baker of the Center for Economic and Policy Research has proposed tax credits for employers to reduce hours of work for their incumbent workers while keeping pay constant.  The workers with reduced hours would still have the same pay and employers would have an incentive to boost employment to make up for the reduction in hours of work among their incumbent workers.  Baker estimates that if 60 million workers reduced work hours by an average of 5 percent, that would lead to the creation of 3 million new jobs.  Learn more about Baker's proposal here and here.

Additional State and Local Budget Relief

As the Pennsylvania Budget and Policy Center (PBPC) illustrates in its analysis of the 2009-10 state budget federal stimulus dollars forestalled deeper cuts in state spending in Pennsylvania.  But here in Pennsylvania as elsewhere the fiscal relief was not sufficient to avoid cuts in state spending, Pennsylvania state spending fell by $524 million in the 2009-10 budget.  As a result of these cuts total layoffs in the state have now risen to 769 workers.  The Economic Policy Institute(EPI) estimates that ARRA funds only covered about 31% of the state budget gaps that emerged over the last year.  Going forward state fiscal relief in ARRA will drop to $38 billion as the cumulative budget gap faced by the states will climb to a record $180 billion.  Absent additional aid to the states layoffs will only rise in the months ahead.  As the EPI paper illustrates cuts in state spending hurt more than just public sector workers, EPI estimates that for each dollar of budget cuts, over half of the jobs and economic activity lost are in the private sector.

A Public Service Jobs Program

A major drawback of proposals to reduce taxes to spur employment is that such measures are often much more expensive per job created than directly putting people to work in temporary public service jobs.  These could be jobs cleaning up abandoned and vacant properties, staffing emergency food programs, working in child care programs and renovating and maintaining parks, playgrounds and other public spaces.  See the Economic Policy Institute for more on a model public service jobs program.

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