The Truth About Government ‘Job Creation’


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With less money in the private sector, the loss of jobs there can easily exceed the million jobs created in the government or in industries subsidized by the government. The Obama administration’s creation of “green jobs” has turned out to cost far more money per job than the cost of creating a job in the private sector.

In addition to reducing jobs in the private sector by taking money out of the private sector to pay for government-subsidized jobs, the Obama administration has made businesses reluctant to hire because of the huge uncertainties it has created for businesses as regards the cost of adding employees. With thousands of regulations still being written to implement ObamaCare, no one knows how much this will add to the cost of hiring new employees.

In the face of this economic uncertainty, even businesses that have an increased demand for their products can meet that demand by working their existing employees overtime, instead of adding new employees. Many employers hire temporary workers, who are not legally entitled to benefits such as health insurance, and who will therefore not be affected by the cost of ObamaCare.

When President Obama boasts of the number of jobs created during his administration, the numbers he cites may be correct, but he doesn’t count the other jobs that were lost during his administration. His critics cite the latter. Both can claim to be right because they are talking about different things.

What has been the net effect? During this administration, the proportion of the working age population that has a job has fallen to the lowest level in decades. The official unemployment rate does not count the millions of people who have simply given up looking for a job.

If everybody gave up looking for a job, the official unemployment rate would fall to zero. But that would hardly mean that the problem was solved or that the “stimulus” worked. Creating particular jobs does not mean a net increase in jobs.

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  • davarino

    Thanks Thomas. These are facts that are lost on the populace that allows the media to spoon feed them the news. Thinking is a lost art.

  • Sprinklerman

    Thank you Mr. Sowell for making this easy to understand. The sounds coming from both sides have been confusing at times. Not the least of which is the "jobs saved" mantra.

  • Lady_Dr

    Dear, dear Dr. Sowell,

    You are one of my heros – numbers were never my strong point, so there was no way I could ever study economics – but the fact is it is basic, common sense. And you make it SO understandable. Despite being innumerate I did raise revenues 25% each year for 4 straight years in one position – it was SO easy, just apply elbow grease and common sense. Clearly, our dear leader lacks both. You however have both in abundance. (Have you ever considered running for office?)

  • Johncdavidson

    We have too many people getting paid to formulate lies into facts.

  • sedoanman

    Re: "The government can create a million jobs tomorrow, just by hiring that many people."

    Hiring a government worker does not necessarily mean a job was created.

  • nasirjo

    its absolutely true facts about jobs creation

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