The voices of Urban Institute's researchers and staff
April 25, 2011

Who Are We Creating Jobs For?

April 25, 2011

Most responsible policymakers are desperately seeking ways to reduce the federal budget deficit, but the strategies proposed vary wildly.  Some would cut federal spending to the bone, while a few would take the opposite approach—hiking taxes without cutting services. Opponents of tax increases argue that taxing the wealthy more won’t generate enough revenue to dent the deficit much but will, along with higher taxes on small business owners, discourage job generation.

But let’s dig deeper on this score. Many deficit-busters who oppose tax increases would cut spending on education and training services or subsidies to disadvantaged individuals, support for child care and early childhood development, and incentives for infrastructure and community development.  At best, concentrating cuts on these programs could be expected to reduce the deficit as much as proposed tax reforms would.  For example, spending on these programs in 2011 amounts to about $500 billion, while President Obama’s tax proposals would raise about $700 billion in revenue. But the impact of the budget cuts would be more far-reaching, basically making it far harder for firms to find the skilled workers they will need if they expand.

Population trends make it clear that a substantial and growing portion of the future workforce will come from communities of color—African Americans and Hispanics, many of whom have found it hard to prepare for jobs in the new economy because they lacked access to good K-12 schools and higher education.  Here’s where those far-sighted federal programs on the deficit chopping block come in: many aim to increase the quality and quantity of education these groups receive while others make it possible for low-income parents to work while their children benefit from good child care and early childhood developmental programs.  Similarly, community development initiatives make neighborhoods safer and more liveable for children and adults.

Even if some of federal programs are not as effective as they could be, improving them makes far more sense over time than eliminating them. Indeed, if we end the drive for more effective ways to support the young people who will be the backbone of tomorrow’s workforce, there won’t be enough workers to fill the jobs that the best tax incentives for business would generate.  

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