unemployment

Interesting Look at How Federal Investments Drove Job Growth in Charlotte

/ The Old Crank

(Updated Below)

For anyone interested in job creation and job training—and the debate over the federal role in both—this story on a new Siemens turbine plant in Charlotte in yesterday’s Washington Post is probably going to be more interesting than anything you’ll read coming out of either of the political conventions:

Ask Siemens executives why they placed their bet on Charlotte and they talk about public investments such as the state-funded rail spur that runs through their facility and the city’s international airport, which recently added a fourth runway using $132 million in federal funds.

They talk about the Export-Import Bank, an independent federal agency that in January approved a $638 million loan to finance the sale of turbines to Saudi Arabia, helping Siemens beat bids from companies in Germany, South Korea and Japan.And they talk about the quality of the workforce in Charlotte, where local leaders are retooling the public education system to churn out the engineers and skilled technicians needed to operate one of the most efficient gas-turbine plants in the world.

My only quibble with this piece: I don’t understand why the austerity budgets “favored by the GOP” are set aside as if they are somehow separate from Romney’s position.

Romney’s plan for growth centers on slashing government spending while cutting tax rates sharply for everyone. Romney claims his approach would create 12 million jobs over the next four years, a conclusion that relies heavily on research by Alan Auerbach, an economist at the University of California at Berkeley.

Auerbach, who has studied the economic effects of tax cuts, said lower taxes on savings and investment do cause people to plow more money into new investments, which “should lead to faster economic growth.” But “how much, how fast” is harder to say, Auerbach said. And that approach is, in any case, less likely to be effective in a sluggish economy, he said, when businesses are holding back on new investments not because they do not have the cash but because they are “looking first at whether they can sell stuff.”

“If the question is what would [Obama and Romney] do right now to spur economic activity,” Auerbach said, “I’m not sure either platform is particularly well designed for that.”

Meanwhile, the austerity budgets favored by the GOP would cut government spending in the very areas that do seem to matter. (my emphasis) In his most recent budget, Romney’s vice-presidential running mate, House Budget Committee Chairman Paul Ryan (R-Wis.), proposed spending 25 percent less on transportation over the next decade than Obama and 31 percent less on education and training.

As part of their campaign to shrink the size of government, House Republicans also tried to kill the Export-Import Bank, which encourages exports by financing the foreign purchase of U.S. goods and services, turning a profit for taxpayers. Spiegel said the bank was a critical factor in Siemens’s decision to build turbines for export in the United States. 

Romney has endorsed the Ryan budget cited here. It’s not as if Romney has one approach and House Republicans have another one that is on some kind of separate track (“meanwhile”). Whatever the merits are of Romney’s proposal to cut tax rates in order to spur growth, by endorsing that budget, he has completely embraced the federal infrastructure and education spending cuts proposed by Ryan and his party. Those spending cuts are just as much a part of his approach as his tax rate cut proposal. And if those cuts “do seem to matter,” then the differences between the two candidate’s approaches are perhaps more significant than this article suggests.

UPDATE 9/5/12 7:22pm: Added the last sentence and edited the whole piece slightly for clarity and emphasis.

A Call to End the GED in New York

/ The Old Crank / 1 Comment

Thomas Hilliard, a Senior Fellow in Workforce Development Policy at the Center for an Urban Future, thinks the revamped GED, scheduled to launch in January, 2014, “could be a disaster for New York.” In a commentary published by the Times Union on July 17th, Hilliard notes that the state of New York as yet to come up with a plan to address the increased cost of the test or provide for an alternative:

The GED Testing Service, which has long administered the GED, announced plans to revamp the test to ensure that anyone who passed it would be ready for college-level coursework. This is understandable given the premium on college credentials in today’s economy. But as it set out to create a new test, the GED’s stewards decided to enter into a partnership with Pearson LLC, the world’s largest educational publisher. Pearson took over leadership of the GED Testing Service, and in May 2012 announced plans to raise the price of the GED to $120, effectively doubling its cost to New York state.

The increase is particularly troublesome because New York state bars the charging of a fee to take the GED and pays the full costs of testing out of the state budget—roughly $2.7 million last year. Unless the state doubles its expenditure—an unlikely prospect—the number of test slots for people to take the GED could fall by half, from 45,000 to 22,500.

As a result, New York could easily lose thousands of GED holders a year, a damaging blow to the state’s economic competitiveness and the job prospects of low-income youth and adults.

Hilliard concludes his piece by calling on New York State policymakers to drop the GED altogether: “It’s time for the state to end its partnership with the GED and give New Yorkers an alternative high school equivalency exam—preferably one that is less expensive but every bit as accepted by employers and colleges as the GED.” While acknowledging that the state has begun exploring alternative tests, he implores them to step up their efforts, noting that “time is running out” to establish an alternative by the end of 2013.

In related news, New York City’s unemployment rate climbed to 10 percent in June.

Report Identifies Benefits of Literacy Instruction for the Unemployed

/ The Old Crank

According to The Irish Times, a study in Ireland has found that unemployed people with literacy and numeracy problems who receive targeted training are almost three times more likely to move out of unemployment within a year than other unemployed people receiving the same training.

The Times reports that previously there has been no research on the experiences of unemployed people in Ireland with literacy and/or numeracy problems.

Quote of the Day

/ The Old Crank

“[E]very way you cut it — by race or gender, with or without a college degree — young people are just not getting the job opportunities they need, and it will have a lasting impact on their careers,” said Heidi Shierholz, an economist who studies the labor market at the Economic Policy Institute in Washington. (my emphasis)

The quote comes from a story in the New York Times a couple of groups that are working on this issue: the Campaign for Young America and Fix Young America.