the no. 1 issue on the minds of voters this year is jobs, and politicians on Beacon Hill are responding with a flurry of proposals.
Most of them fall in one of two categories. They’re either initiatives to create jobs directly or calls for more systemic changes in tax and regulatory policies to foster an environment in which businesses would be more likely to expand and hire employees.
Gov. Deval Patrick and House Speaker Robert DeLeo are championing job-creation proposals. Patrick is backing a $2,500 tax credit for each new job a small business creates. At press time, DeLeo was leading the charge for two casinos, as well as slot machines at the state’s four race tracks, with some portion of the revenue going to support manufacturing companies.
Republican gubernatorial candidate Charles Baker and independent gubernatorial candidate Timothy Cahill are pitching proposals to improve the overall business climate. Baker says the state is uncompetitive in so many areas that policymakers need to reduce taxes and streamline regulations to make Massachusetts a more attractive place to do business. “It’s not sexy and it’s not headline-grabbing, but if you don’t take care of the basics, the rest of this is noise,” Baker says.
Cahill has a similar philosophy, but he’s wrapped it in a sexier package. He encourages Massachusetts to follow the lead of the Boston Red Sox. He says the team ended its championship drought only when it began to stress pitching, defense, and player development instead of home runs and free agents. He says Massachusetts should follow the same strategy by reducing taxes, spending, and debt service costs. He calls his proposal ERA, for earned run aver…I mean, economic recovery act.
Generally, I tend to favor the systemic approach, even though politicians often don’t follow through on their proposals once they get into office and are confronted with the challenges of cutting taxes and regulations.
The problem with states trying to create jobs directly is that it’s an uphill battle. Economic activity is dictated more by national and international factors than local ones. State governments also have to balance their budgets, so it’s difficult for them to invest enough in job creation incentives to have a real impact. That’s a major consideration in a state that has lost 166,000 jobs over the last two years.
It’s also tough for states to pick which industries should be targeted. Beacon Hill politicians three years ago bet big on the movie industry, offering filmmakers a hefty tax credit equal to 25 percent of whatever they spent in Massachusetts. The credit attracted a lot of movies, but a lot of the state’s money went to pay the salaries of out-of-state actors, directors, and technicians.Now Patrick wants to shift gears. He favors capping the film tax credit at $50 million a year, then funneling the roughly $50 million that would be saved into the initiative that would give small businesses a $2,500 tax credit for each new job they create. The credit is so small that it’s more of a “thank you” for creating a job than an actual incentive. Still, if all the tax credits were gobbled up, it would translate into 20,000 jobs.
DeLeo’s gambling proposal is the most intriguing jobs gambit. It comes with all sorts of societal risks, but it is a realistic job creator. In a speech last month, DeLeo didn’t oversell the jobs or the revenue that gambling would produce, which was wise. As Alison Lobron reports in this issue’s cover story on a Pennsylvania casino startup, gambling jobs often don’t materialize as fast or in as great numbers as we think. By the same token, she reports, gambling wasn’t the negative force its opponents feared.