Job subsidies provide push to private sector
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July 29: States are putting hundreds of thousands of people directly into jobs through programmes reminiscent of the more ambitious work projects of the Great Depression. The opportunity to simultaneously benefit struggling workers and small businesses has helped these job subsidies gain support from liberals and conservatives.
Congress is now considering whether to extend the subsidy, which would expire in September, for an additional year. A House vote is expected on Thursday or Friday. Despite questions about whether the programmes displace existing workers, many economists have argued that direct job creation programmes are a more cost-effective way to put some of the nation’s 14.6 million unemployed back to work than indirect alternatives like tax credits and construction projects.
The average duration of unemployment continues to break records, after all, and studies have shown that the longer people are out of work, the less employable they become.
“I never, ever, ever thought I’d end up in an art gallery,” said Mr Tremaine Edwards, 35, a former computer technician who had been unemployed for two years before he was hired in May by Gallery Guichard, a private gallery in Chicago. Mr Edwards now earns $10 an hour, financed by the government, through the Put Illinois to Work program, to maintain the company’s web site, curate exhibits and run gallery events.
He has also become the gallery’s star salesman, selling five paintings during the most recent gallery opening despite no background in fine arts or sales. “I feel like if I knew I could have done this 15 years ago, I would have,” he said, grateful for the opportunity to escape cubicle life. “As long as I keep selling like this, I think I’ll be fine, no matter what happens with Put Illinois to Work.”
Proponents of these national job subsidies, initially financed with $5 billion of stimulus money, say it is better to pay people for working in real jobs than to pay them jobless benefits for staying idle. Placing workers in the private sector is also more promising than giving them make-work government jobs, they say, because market forces can be harnessed to figure out where people like Mr Edwards should invest their skills for the long run.
Others contend that training and financing will accomplish little if businesses are unwilling to hire on their own. They argue that government policies should instead be encouraging business growth robust enough to create jobs independently.
The effectiveness of these programmes will not be clear for many months, if ever. As the stimulus money dries up, employers will decide whether to keep the workers at their own cost or cast them back into the unemployment pool.
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