We Can't Afford The Government's Job "Creation"

Government-created "jobs" cost far more than private-sector jobs.

The Wall Street Journal published, "Targeting the Wealthy Kills Jobs," an op-ed piece by T.J.Rogers, the founder and CEO of Cypress Semiconductor.  After introducing himself, the author states:

According to the latest 2012 IRS income-tax data, the top 1% of American taxpayers earned 20% of all income and paid 36% of all taxes. The top 5% earned 36% of all income and paid 58% of all taxes. Will even higher taxes help the economy?

Mr. Rogers' investment in Cypress Semiconductor supports 3,479 high-paying jobs with full benefits.  HIs company has paid out $4 billion in wages and the employees who received those wages paid income taxes. He points out that investors generally reinvest most of their profits in search of even bigger gains.

I decided to invest in my hometown of Oshkosh, Wis., by building a $1.2 million lakefront restaurant. That restaurant now permanently employs 65 people at an investment of $18,000 per job, a figure consistent with U.S. small businesses.

Cypress Semiconductor is a much more capital-intensive business which required an investment of $198,000 per job created.  Mr. Rogers' investments per job created range from $18,000 to $198,000.

Mr. Obama keeps saying he wants to tax away rich folk's money so he can invest the money in creating jobs.  According to the Congressional Budget Office, the 2009 "stimulus" cost between $500,000 and $4 million per job created.

Wouldn't it be better to leave the money in investor's hands?  After all, they create jobs much more cheaply than government can.

The NYT Weighs In

Lest you disbelieve those right-wing forces at the CBO, listen to what the New York Times said about federal job creation:

For example, the United States Department of Agriculture has called its $1.6 billion business and industry loan program a rousing success. Not surprisingly, the department often trumpets the number of jobs that are expected to result from these loans - figures that it gets from the borrowers themselves. Whether these jobs are actually created, however, is another story.

After explaining how the program works, the Times reports:

A current success story on the agency's Web site is that of Carolina AAC, a company that received $10.4 million in late 2010 to build a concrete manufacturing plant in Bennettsville, S.C.

"This project will create approximately 197 new jobs in Marlboro County," the Agriculture Department's Web site says. Such a figure would make Carolina AAC the program's third-largest borrower in terms of jobs created.

But Carolina AAC said in a January 2011 news release that only 36 jobs would be created at the project. And even that has not come to pass. Currently, 10 people work at the company, according to Charles Paterno, its managing member. Troubling for taxpayers is that the government backs 90 percent of the loans and they are in liquidation.

That's not all.

Singleteary Food Solutions is another borrower under the program. Its $4.36 million in U.S.D.A.-guaranteed loans was expected to create 220 jobs in Wells, Minn., population 2,300. Singleteary was expected to be the second-largest job creator in the program; it also received a Small Business Administration loan for about $4 million.

But the Wells plant never opened.

The company that was expected to be the largest job creator under the program was the Peninsula Plywood Group of Port Angeles, Wash. The roughly $2 million loan for its lumber mill was guaranteed by the Agriculture Department in January 2010 and expected to create 334 jobs. The facility opened for production later that year but ran into financial trouble and closed in late 2011. Local news reports said it employed 130 people at most.

The loan has been liquidated and the Agriculture Department paid a loss claim of $958,000.

The lumber mill created about one-third as many jobs as promised.

The Times has been a cheerleader for increased government spending for as long as we can remember.  If even they are finding government spending to be shockingly inefficient, it might occur to them that it would be a good idea to leave more money with those nasty rich folks whose only redeeming virtue is that they actually do create jobs.

Will Offensicht is a staff writer for Scragged.com and an internationally published author by a different name.  Read other Scragged.com articles by Will Offensicht or other articles on Economics.
Reader Comments

This particular subject has been the most frustrating issue that I have ever discussed.
According to the late Lt. Colonel Klatt, who retired from the USAF as a CPA and then worked in the private sector, provided some pertinent information of the subject of job creation. His website www.cafrman.com is filled with useful information that can be used by anyone who wants to bring about a positive change in government.
The information is good at the local level. Cities and Counties have perhaps more than a trillion dollars in "cash and investments" accounts. That is money collected in taxes, license fees, fines and levies that is not needed for the operation of the government.
For example: Clark County, Nevada has more than $422,000,000.00 in 'loaned securities'. That is $422,000,000.00 collected from the taxpayers of Clark County, Nevada that should be in the hands of the public. That would create 4,200 jobs at a cost of $100,000.00 per job, which is the number Col. Klatt uses. Peace Robert Walker

September 10, 2013 10:00 AM


I too am frustrated with examples like yours in Clark County. It's absurd for government to even think for a micro second that they could create a job. The bottom line is that the politicians are good at getting elected by promising to be Santa Claus. They extract money from the private sector and waste it on some boondoggle. They get their picture taken at the ribbon cutting and name a few bridges or buildings after themselves promoting their importance to Joe Six Pack and voila, they are reelected. They couldn't care less if their projects work or not, they just don't want to be labeled a do nothing politician. If we the citizens don't rise up against this waste then we will implode.


September 10, 2013 10:27 AM

Bassboat, You are part of the solution! You, at least, are aware of the situation. So few are aware. Get a few others in your area who are interested, and visit the comptroller's office of your town, city, or county and have the Comprehensive Annual Financial Report explained to you. You will find that the entity in question does NOT bring forward any money from the prior fiscal year to the current one. Those funds are now in the 'cash and investments' fund, and invested, usually in other government's bonds. It is a shell game. I am working on it here, now. Peace, Robert Walker

September 10, 2013 11:44 AM
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