Big Ideas for Job Creation, a project of The Institute for Research on Labor & Employment at the University

of California, Berkeley, tapped into the innovative thinking of leading experts across the nation to develop job creation proposals. Every idea had to meet the following criteria: Designed for implementation by cities and/or states; capable of producing short-term gains in net jobs; practical, sustainable, scalable and already tested; accessible for low-skilled workers and able to provide career opportunities. Taken together, these Big Ideas can create millions of new jobs for our country.

Big Ideas for Job Creation by States and Cities

by Karen Chapple and Robert P. Giloth

n the aftermath of jobs speeches and counter proposals over the nations stagnant unemployment rate, one thing is clear: The need for job creation will remain in the headlines as long as 25 million Americans need full-time work.

cities need to step into the job creation arena if the unemployment crisis is to be addressed. But are there good ideas out there that could make a dierence in communities across the country? Recently, the Institute for Research on Labor & Employment at the University of California, Berkeley, supported by the Annie E. Casey Foundation, solicited big ideas about promising programs and policies for job creation. We found a number of ideas worthy of consideration and potential investment, ranging from direct, FDRstyle job creation to tax credits for employers who add jobs. They include sustainable local food systems and strategies for turning waste into jobs. We asked our big idea generators, a group of academics and practitioners versed in economics and economic development, to design jobs programs for cities and states (with or without federal support) that would lead to net new job creation in the shorttermone to three years. We wanted low-cost, readily implementable programs that would create jobs accessible to low-skilled workers. We sought to avoid gimmicks (such as one-time budget transfers), as well as wasteful incentive programs that simply lured jobs from one place to another.

What is less clear is how best to create those jobs. Conventional wisdom tells us that the federal government must use scal and monetary policies, while counting on innovation, skills and trade over the long haul. But the traditional policies are not working as expected. Spending and investment have not materialized, and debate rages about how demand, investment, and global conditions can create jobs in the short-term. Throughout, we hear the perennial partisan cries for more tax cuts or more infrastructure investment. As President Obama has said, we cannot waste any more time. For every job the private sector has added in the past two years of recovery, the public sector has cut half a job. Whats more, job losses since the beginning of the recession reect an ongoing restructuring that has disproportionately aected the most disadvantaged populations, with losses concentrated in construction, manufacturing, retail and administrative and waste services. Whether Congress takes up any of President Obama's practical ideas for job creation, states and

B IG IDE AS FOR JO B CR EAT IO n A P ROJECT OF T h E U nI v ERSI T y O F CA LI FO R nIA, BERK ELEy

Three basic approaches emerged in our search: Tweaking an existing federal employment or tax policy so that it can be implemented at the state or local level. helping small businesses generate more jobs. Developing new jobs in emerging or resurgent sectors, such as clean energy and manufacturing.

Our list touches on the major generators of job growth from private and public sectors: small business, new markets, public employment and tax policy. The list stands out as distinctive in at least two ways: Each jobs idea oers potential for local and state action; and our jobs ideas are particularly relevant for low-skilled workers. Moreover, several of our big ideas directly address a neglected part of the unemployment debate: job quality. The economy of today is still creating jobs in services and health care. Many of these jobs are lowpaying, without adequate benets and with few prospects for career advancement. not surprisingly, there is a lot of turnover in these positions because of the nature of the jobs themselves. We believe reducing this job churn should be part of a short-term job creation approach, as well as retention more generally.

Short Time Compensation: vera Brusentsev at the University of Delaware and Wayne vroman at the Urban Institute demonstrate that jobs can be saved if companies reduce hours for all employees and supplement wages with unemployment insurance money, rather than laying o some workers. This is a particularly eective strategy in states reliant on manufacturing during recessions. Infrastructure Investment: Scott Bernstein at the Center for neighborhood Technology and Joel Rogers at the Center on Wisconsin Strategies suggest using private capital in infrastructure projects under public performance terms in order to provide speed and competence to current investment processes. Direct Job Creation: Philip harvey at Rutgers University-Camden explores the feasibility of state or local government creating public jobs, modeled on the WPA.

Sectoral or Industry Approaches Sectoral or industry approaches oer short-term job opportunity and build capacity to help the U.S. compete globally in the long-term. Policymakers have attempted to spur the clean energy and manufacturing sectors with mixed success. yet, energy eciency retrots and the recycling industry oer promise with just minimal job displacement. Retrotting Institutions: Satya Rhodes-Conway and her colleagues at the Center on Wisconsin Strategy show how the lowest-hanging fruit for energy eciency retrots is in municipal, university, school, and hospital buildings. Turning Waste into Jobs: nancey Green Leigh at Georgia Tech analyzes how waste diversion can create new jobs through both regulatory and demandside strategiesturning waste into jobs, not landll. Retrotting Homes: Bill Lester at University of north Carolina at Chapel hill demonstrates the economic logic of a real estate transfer tax to support residential retrots. Reviving Manufacturing: Susan Christopherson at Cornell University argues that manufacturing has a future in the U.S., and could be supported through payroll tax incentives and more strategic approaches to energy and economic development policies. Improving Early Childhood Education Jobs: Steve herzenberg at Keystone Institute and Elaine Weiss at the Economic Policy Institute turn to the service

THE IDEAS
Federal Tax and Employment Policy Approaches One set of jobs ideas addresses federal tax policies and examines how eective policy changes could be for disadvantaged workers. Though many of the jobs created under these programs will be short-term, most will be new, without displacing any workers. The ideas include: Hiring Credits During Recessions: David neumark at University of California, Irvine shows how hiring tax credits for every new job an employer adds are an eective short-term policy in response to a recession. Subsidized Jobs: Elizabeth Lower-Basch of the Center for Law & Social Policy demonstrates how subsidized jobs programs, such as those under the TAnF Emergency Fund, are more eective for disadvantaged workers than the Work Opportunity Tax Credit.

sector, showing how improving the quality of child care jobs could reduce turnover in that sector while enhancing investments in our future workforce. Entrepreneurship Approaches Fostering self-employment, working with community partners on emerging sectors, and removing regulatory barriers for immigrant workers and minority business owners can bring broader, more sustainable employment. Community-Based Job Creation: A team from the Corporation for a Skilled Workforce argues for job creation partnerships within communities emphasizing building deconstruction, energy retrotting and food production. Capturing the Shadow Economy: Anna Kim at Pomona College shows how bringing informal jobs in immigrant communities into the formal job markets can create new jobs while improving our counting of all jobs. Regulatory Relief for Minority-Owned Businesses: Timothy Bates at Wayne State University shows how to improve access to capital for minorityowned businesses by enforcing existing laws outlawing small-business discrimination in lending. Tax Benets for Entrepreneurs: Bill Schweke at CFED explains how the government can leverage Schedule C tax preparation assistance for the self employed , thereby allowing workers to access current tax credits, creating additional jobs.

Individually, each jobs idea has a small or modest impact on the current job shortage. But together, they show how to make collective impact by a multipronged approach. . .these ideas could create, retain, or improve millions of jobs.
support these investments. We also believe there are other viable nancing ideas yet to be identied that could be used to invest in job creationand perhaps more critically as the public sector sheds jobs, preservation as well. Our search for big ideas is ongoing, with solicitations for another round in the works. But we believe we have found an initial set of good, viable ideas that should be given a more detailed look. We have also found a lot of muddled thinking about the levers for creating jobs; distinctions between job creation, preservation, and quality; and scalable ideas that have passed a proof of concept in some form. One of the most dicult challenges, paradoxically, has been linking specic investments or policy changes to an expected number of new jobs. We need lots of big ideas if we are to overcome our jobs challenge. And we need jobs investments to bubble up from cities, states, and regions as well as from smart federal action. Our sample of job creation ideas is just a start.

Individually, each jobs idea has a small or modest impact on the current job shortage. But together, they show how to make collective impact by a multipronged approach, involving local or state action enabled by a federal structure. Based on this research, we estimate that for a wide range of costs from $1,000 to $230,000 per job we could spur the creation of a variety of jobs, from part-time selfemployment through full-year, full-time high quality jobs (see table).Together, these ideas could create, retain, or improve millions of jobs. We have looked for job creation ideas that could pay for themselves or rely upon new or re-purposed sources of nancing. We have been only partially successful. For many of these ideas, investment is required. But we believe there are untapped sources of nancing at the local, state, and federal levels to

Big Ideas for Jobs Creation and Preservation Potential

Proposal Job Creation/Preservation Potential National Type of Job Estimate (full-time/ part- Per $1 Billion time, length) Investment Job Creation FT, unknown duration

Public Sector Cost per Job1

Caveats, Notes, Assumptions

Hiring Credits

23,810 80,000

Range derived from studies; depends on extent of "windfall," i.e., hires that would have $9,100-$75,000 happened anyway. Includes only publicly subsidized share of $2,500-$25,000 wages; does not include administrative costs. Net cost including additional tax receipts, program revenues, and savings in unemployment insurance, Medicaid and CHIP expenditures, $26,162 but not multiplier effects. $143,000Range derived from studies; may be financed $230,000 gross costs via cost savings from energy efficiency. There are no standard data on the cost of job creation in the various sectors of the R3 industry. Case studies provide a range, with the non-profit costs significantly lower than the for-profit. However, since these firms must be $5,000profitable to survive, their labor costs will be $116,000 sufficiently covered by their revenues. gross costs Based on assumptions for North Carolina; may be financed by taxes generated from new $106,111 economic activity. gross costs Range derived from studies; depends on extent of "windfall," i.e., hires that would have $9,100-$75,000 happened anyway. Cost is per self-employed business; business $1,000-$3,000 may not provide full income. Based on assumptions for Detroit. This policy is potentially cost-neutral (no new costs from $128,676 what already spent on demolition). gross costs Range derived from studies and based on as$136,842sumptions for Detroit.Public cost varies depend$186,667 ing on level of private investment leveraged. gross costs $45,000
gross costs

Subsidized FT, unknown Jobs Programs duration

Direct Job Creation

FT job personyear

38,223 5,328

Making MUSH FT/PT jobs, one Energy Efficient year each

Reuse, Recycling, Remanufacturing

FT/PT jobs, unknown duration

16,529

RE Transfer Taxes for En- FT/PT jobs, one ergy Efficiency year each FT, unknown Manufacturing duration SelfEmployment FT/PT jobs, unknown duration

9,424

23,8102 500,000

CSW - Building FT job personDeconstruction year CSW - Home FT job personEnergy Retrofits year FT job personMBE Financing year Job Preservation Short Time 1/5 FT job perCompensation son-year Early Childhood FT job personEducation year

7,771

6,182 22,222

Assumes loans made to firms that hire one worker per $45,000 in firm total assets.

444,444 66,667

$1,560 is the added payout of 52 weeks of STC versus 52 weeks of regular UI benefits; $2,000-$2,500 range reflects different administrative costs. Assumes $6/hour pay increase plus benefits $15,000 and training.

Sources: Bates (2011); Brusentsev & Vroman (2011); Christopherson (2011); Di Ramio, et al (2011); Harvey (2011); Herzenberg-Weiss (2011); Irwin, et al (2011); Leigh (2011); Lester (2011); Lower-Basch (2011); Neumark (2011); Schweke (2011); author's calculations. Endnotes:1 Assumes midpoint costs for all ranges. All calculations exclude indirect job creation and multiplier effects. Administrative costs are included in all estimates, except where noted. Ideas that include gross costs generally account for materials, overhead, and other non-labor costs as well. 2 In the case of manufacturing, assumes that employers use hiring credits.

About Big Ideas for Job Creation

Big Ideas for Job Creation, a project of the Institute for Research on Labor and Employment at the University of California, Berkeley, with the support of the Annie E. Casey Foundation, tapped into the innovative thinking of leading experts across the nation to develop job creation proposals. Every idea had to meet the following criteria: designed for implementation by cities and/or states and will lead to net new job creation in the short-term; practical, sustainable, scalable and already tested; and all jobs created should be accessible for low-skilled workers and offer some career opportunity. Taken together, these Big Ideas can create millions of new jobs for our country. For more information, visit http://www.BigIdeasforJobs.org