Generating Jobs through State Employer Tax Credits: Is there a Better Way? (Revised)

Revised April 13, 2010The Governors of Massachusetts, Connecticut, Rhode Island and several other states have recently proposed employer tax credits as measures to fight high unemployment in their states. Such policies are also being considered at the federal level. In the Working Paper, Jeff Thompson and Heidi Garrett-Peltier present evidence that such policies, in fact, do little to increase aggregate demand, and instead only modestly reduce the after-tax cost of labor in an economy with high unemployment, falling wages, and weak demand They suggest a more effective approach to creating jobs in the states: increasing spending in labor-intensive sectors and programs that are matched by federal funds, such as Medicaid. These expenditures would be particularly effective if they were financed through temporary high-income tax increases.State and Local Taxation, Subsidies, and Revenue, state and Local Budget and Expenditures, State and Local Government, Health, Education, and Welfare, Business Taxes and Subsidies,Labor Demand, Wages, Compensation, and Labor Costs

The U.S. Employment Effects of Military and Domestic Spending Priorities: An Updated Analysis

In this study, produced in collaboration with the Institute for Policy Studies, Robert Pollin and Heidi Garrett-Peltier update their earlier analysis of the relative employment impacts of public investment in military versus other priorities, expanding their analysis to include clean energy investments and induced job creation. The authors compare the effects of a $1 billion military investment military and the same investment in clean energy, health care, education, or individual tax cuts. They show that non-military investments create a much larger number of jobs across all pay ranges. With a large share of the federal budget at stake, Pollin and Garrett-Peltier make a strong case that non-military spending priorities can create significantly greater opportunities for decent employment throughout the U.S. economy than spending the same amount of funds with the military. ��� >> Women's Action for New Directions and the Institute for Policy Studies have produced a short fact sheet based on the findings from this report.�

The Employment Effects of Downsizing the U.S. Military

This study focuses on the employment effects of military spending versus channeling some significant part of the military budget into alternative purposes.� We begin by introducing the basic input-output modeling technique for considering issues such as these in a systematic way. We then present some simple alternative spending scenarios, namely devoting $1 billion to the military versus the same amount of money spent for five alternatives: tax cuts which produce increased levels of personal consumption; health care; education; mass transit; and construction targeted at home weatherization and infrastructure repair. Our first conclusion in assessing such relative employment impacts is straightforward:$1 billion spent on personal consumption, health care, education, mass transit, and construction for home weatherization and infrastructure will all create more jobs within the U.S. economy than would the same $1 billion spent on the military. We then examine the pay level of jobs created through these alternative spending priorities and assess the overall welfare impacts of the alternative employment outcomes. We then consider what would be the impact on employment of transferring all$138 billion in funding that went to the Iraq war in 2007 into alternative peaceful purposes. As we show, a transfer of funds of this magnitude would enable the U.S. government to provide, for example, health insurance for the 45 million U.S. residents who are now uninsured, and still provide funds for significant investments in education and energy conservation. A transfer of the Iraq budget into these alternative purposes would also expand employment in the U.S. by between 600,000 – 1 million jobs, depending on how exactly the $138 billion were allocated.�

Building a Green Economy: Employment Effects of Green Energy Investments for Ontario

In this study of Ontario’s green economy, Robert Pollin and Heidi Garrett-Peltier present an approach to realistically estimate the employment effects of green investments in Ontario. They focus on two alternative investment scenarios for the province: a baseline program of $18.6 billion invested in conservation and demand management; hydroelectric power; on-shore wind power; bioenergy; waste energy recycling; and solar power over 10 years, and a more ambitious$47.1 billion 10-year investment program, also investing in off-shore wind power and a smart grid electrical transmission system. They describe the jobs created by these strategies, and recommend ways for the province to maximize the quantity and quality of those jobs.

The U.S. Employment Effects of Military and Domestic Spending Priorities

The war in Iraq is a strategic and moral disaster. But one issue relating to the war that hasn’t been addressed in depth is its impact on the U.S. economy. In the first of a series of research papers that will consider this issue, Robert Pollin and Heidi Garrett-Peltier consider the impact of military spending versus spending on a series of peaceful priorities -- including health care, education, and energy conservation -- on job creation in the U.S. The study finds, for example, that while investing a billion dollars of tax revenue in the military creates 8,500 jobs, investing the same amount in education or mass transit yields more than twice that number of jobs. This study is co-sponsored by the Institute for Policy Studies and Women’s Action for New Directions.

Kuznets, Kaya, and Shapley: The Economic and Energetic Determinants of Carbon Emissions and the Implications for Development and Environmental Policy

With global climate change becoming an increasingly pressing concern, the relationship between economic growth and environmental outcomes is as important as ever to understand, particularly in designing policies for low- and middle-income countries that incorporate both environmental and development objectives. The Environmental Kuznets Curve (EKC) shows the relationship between income and environmental outcomes. In this paper we examine the existence and shape of the EKC for 132 countries for the period 2000-2010. We add to the EKC literature by using the technique of Shapley Decomposition to assess Kaya identity factors for these 132 countries, grouped into income quartiles. The Kaya Identity relates emissions to income, energy intensity, and emissions intensity. Shapley Decomposition (SD) allows us to understand the importance of each of these factors. By applying the SD technique to the Kaya Identity for countries grouped by income level, we can assess the importance of income on emissions for countries at various stages of development, and we confirm the presence of a global EKC. For lower income countries, rising income is the most important determinant of emissions; but at higher income levels economic growth is offset by improvements in energy efficiency and decarbonization, thus explaining the inverted-U-shaped EKC

How Infrastructure Investments Support the U.S. Economy

The U.S. system of public infrastructure has deteriorated badly over the past generation. The breaching of New Orleans’ water levees in 2005 and the collapse of the I-35W bridge in Minneapolis in 2007 offered tragic testimony to this long-acknowledged reality. The project of rebuilding our infrastructure now needs to be embraced as a first-tier economic policy priority, and not simply to prevent repetitions of the disasters in New Orleans and Minneapolis. Infrastructure investments—particularly core economic infrastructure in t energy, transportation, and water and sewerage—are essential for the functioning of the U.S. economy. With the deterioration of economic conditions in recent months, public investment is back on the policy agenda, as a job-creation program linked to the need to revitalize the nation’s crumbling infrastructure. In this report, Robert Pollin, James Heintz and Heidi Garrett-Peltier examine the employment impacts of an expanded infrastructure investment program and what it would take to create millions of jobs. They examine the long-run impacts of such a program on productivity and economic growth, and offer brief observations on U.S. competitiveness and environmental sustainability that emerge from the findings.

New Jobs — Cleaner Air: Employment Effects Under Planned Changes to the EPA’s Air Pollution Rules

In this study commissioned by Ceres, James Heintz, Heidi Garrett-Peltier, and Ben Zipperer examine the economic impacts of air pollution regulations forthcoming from the Environmental Protection Agency: the Clean Air Transport Rule governing sulfur dioxide and nitrogen oxide emissions, and the National Emissions Standards for Hazardous Air Pollutants for Utility Boilers rule, which will set limits for hazardous air pollutants. Focusing on 36 states, the study assesses the potential employment impacts of the transformation of the nation’s energy generation plants to a cleaner, more efficient fleet, through investments in pollution controls and the retirement of outdated plants.

Clean Energy Investments, Jobs, And U.S. Economic Well-Being: A Third Response To Heritage Foundation Critics

The Heritage Foundation recently released a response to “The Economic Benefits of Investing in Clean Energy" by Robert Pollin, James Heintz & Heidi Garrett-Peltier, which, surprisingly, finds consensus on the central point of that study: that investments in clean energy will generate roughly three times more jobs than spending the same amount of money within our fossil fuel energy infrastructure. Where the PERI authors and Janet Campbell of Heritage differ, however, is over the question of whether this job creation is inherently a good thing for the U.S. economy. In this brief response paper, Pollin, Heintz & Garrett-Peltier lay out their case that the U.S. economy will benefit greatly from creating an abundance of new job opportunities for people at all levels of income and credentials, and that it is a double benefit that these new job opportunities will mean mobilizing the U.S. workforce to the project of building a clean-energy economy and thereby defeating global warming.

The Economic Benefits of Investing in Clean Energy: How the Economic Stimulus Program and New Legislation Can Boost U.S. Economic Growth and Employment

This study, commissioned by the Center for American Progress, examines� broader economic considerations—jobs, incomes, and economic growth—through the lens of two government initiatives this year by the Obama administration and Congress. The first is the set of clean-energy provisions incorporated within the American Recovery and Reinvestment Act. The second is the proposed American Clean Energy and Security Act �which is now before Congress. Our analysis in this paper shows that these measures operating together can generate roughly $150 billion per year in new clean-energy investments in the United States over the next decade. This estimated$150 billion in new spending annually includes government funding but is notably dominated by private-sector investments. We estimate this sustained expansion in clean-energy investments can generate a net increase of about 1.7 million jobs. This expansion in job opportunities can continue as long as the economy maintains a commitment to clean-energy investments in the $150 billion per year range. If clean-energy investments expand still faster, overall job creation will increase correspondingly. These investment could, therefore, not only guide us out of our fossil-fuel dependent crisis, but serve as a powerful engine of economic recovery and long-term economic vigor in the U.S. >> Read more about "The Economic Benefits of Investing in Clean Energy" and download state fact sheets>> Download "The Economic Benefits of Investing in Clean Energy"