Government can't just plant jobs. They need the right climate to grow.

Government can't just plant jobs. They need the right climate to grow.

Government can't just plant jobs. They need the right climate to grow.

Unemployment continues to linger just below 10 percent, and in his State of the Union address, President Obama addressed what the government’s next steps will be to chip away at this number.  Mercatus Center economist Bruce Yandle suggests that the best way to help is to ease up on restrictions on the market.

“Politicians and others speak of taking action to create jobs, almost as if the economy will respond like a lawn that receives fertilizer and rain,” said Yandle.  “But as data from the Bureau of Labor and Statistics indicates, the economy is not static at all.”

When considering how the government can aid employment, Yandle says that the government can employ people to perform tasks that are not valued by taxpayers, but warns that creating those jobs may destroy more employment than is added, as the jobs will not be sustainable. 

“On the other hand, governments can take actions that improve the economic climate for private sector firms, so that more people will seek work and firms will hire more workers,” said Yandle.  “These steps include reducing taxes that individuals and employers pay when filling a job and eliminating burdensome regulations that affect the use of labor.”  

Yandle recalls his own experience running a small business, and how he decided when to hire more workers, such as truck drivers.  “Adding an additional driver meant acquiring an additional truck,” said Yandle.  “The cheaper the cost of trucks, the easier it was to add a driver.  If interest rates rose, making truck ownership more costly, the hiring pace for drivers would fall.”

 

 

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