Don Brunell: Stimulate the private sector to reduce joblessness

The stagnant jobless rate in our nation is even worse than it seems.

Nearly one in 10 of those eligible for work are receiving unemployment benefits, and if you add the people who have given up searching for a job, exhausted their unemployment benefits or are working part-time jobs to pay the bills, unemployment is close to 20 percent.

Most people want to work, pay their bills and put a little extra in the bank for their children’s college education or for retirement. But the Pew Economic Policy Group recently reported a record 30% – or 4.4 million – of the nation’s 14.7 million unemployed workers were out of work at least a year in August, up from 23% in December.

Even more troubling, the Pew report shows severe long-term unemployment is taking a growing toll on younger workers. Nearly 37% of those unemployed a year or longer are in the 35-44 age group, up from 22% in December.

And while a college education makes workers less vulnerable to layoffs, it doesn’t fend off long-term unemployment. About 34% of unemployed workers with bachelor’s degrees have been jobless a year or longer, compared to 36% of unemployed high school graduates.

So the question for our elected officials and congressional candidates is, what will they do about it?

At the federal level, the best thing the president could do is quit adding costly new programs such as health care and cap-and-trade, stop pushing unionization, halt the expansion of government, and allow the tax cuts put in place during the previous administration to continue.

Retailers on Main Street create more jobs and pay more taxes than ‚"big business," but they are vulnerable to the added costs created by mandates and regulations. The administration should forget about massaging the small business tax incentives, because they don’t come close to matching the new costs imposed by Congress and the president over the last two years.

At the state level, tax incentives work – they have for a long time. For example, after the Boeing crash 40 years ago, the legislature passed the Economic Assistance Authority which gave a sales tax deferral for new manufacturing facilities that added or saved jobs, a sales tax exemption for installing pollution control equipment, and a B&O tax credit for half the value of the project.

That program worked well and was the principle reason Crown Zellerbach decided to modernize its pulp and paper facility at Camas in 1978. Without those incentives, that mill, now owned by Georgia-Pacific, would have closed.

In 1995, Gov. Mike Lowry and a bipartisan group of legislators passed the manufacturing sales tax exemption for new machinery and equipment, repair and replacement parts and for research and development. In the first year alone, that incentive was responsible for a $250 million in machinery purchases alone by 100 of our state’s smallest manufacturers.

The point is taxes and costs matter. President Obama, Congress and our state legislators need to look closely at the goose that lays the golden eggs. Without a vital private sector, there is no hope of reversing the current trend toward long-term unemployment with no jobs in sight.

(Don C. Brunell is president of the Association of Washington Business)