Stenholm: Options Untapped in Push to Create Jobs

Posted September 24, 2010 at 6:18pm

Economic uncertainty has become a part of American life over the past two years.

[IMGCAP(1)]It is the primary source of the frustration and anger being directed at the federal government. There is no shortage of blame to go around for our 9.6 percent unemployment rate, and the federal government deserves its fair share. There are things our government has done — both right and wrong — to replace the jobs that have been lost during this Great Recession.

Going forward, the administration and Congress should focus on two things: optimizing the unallocated funds from the American Recovery and Reinvestment Act and removing unnecessary restrictions on already or potentially crippled industries. The industries I discuss below — oil and gas, forestry and animal agriculture — offer examples of how small changes in federal policy can help maximize job creation in all industries during these tough times.

The United States’ energy system is based on fossil fuels, and will be for most of our lifetimes. I support efforts to expand our energy portfolio to include more clean energy sources such as wind, solar and nuclear, but I also understand these efforts are expensive and inefficient in terms of creating high numbers of sustainable jobs.

Through ARRA, the Department of Energy has announced numerous grants and loans over the past year to increase nuclear, wind and solar energy production. The five largest add up to about $10.9 billion, yet will create only 2,166 permanent jobs. That means each permanent job costs about $5 million. If temporary construction workers are included in the math, each job costs taxpayers about $1 million. This money may prove to be a good investment in our energy future, but it isn’t an efficient way to produce jobs now.

What President Barack Obama can do to ensure the jobs of tens of thousands of Gulf Coast oil and gas workers is lift the moratorium on new oil and gas drilling. These are good jobs that are threatened by well-meaning but bad policy. If the moratorium remains or is extended, these rigs will leave and take American jobs with them. They will move to waters where drilling regulations are lax or nonexistent and won’t come back. The result will be fewer American jobs, greater dependency on foreign oil and increased risk to the global environment.

The administration has a better record in creating rural jobs through the Forest Service. Last year, ARRA provided $1.2 billion to the Forest Service for wildfire management, capital improvement and maintenance and business development in our nation’s forests. So far, $1.1 billion has been spent on wildfire management and capital improvement, and created a respectable 12,400 direct jobs at a cost of about $90,000 per job.

But not enough of this money has been spent on the timber program, which is one of the most effective programs for creating long-term rural jobs. Studies show a $57 million investment would create 6,000 jobs, at a cost of only about $9,500 per job. The USDA should allocate the remaining $30 million of ARRA money to the timber program, which is aimed at improving the health of federal forests, and in the process provide an immediate boost to jobs in rural areas where the recession has hit hardest.

Congress can also do its part to optimize job creation. One easy step is to restore appropriations for inspections of humane horse processing plants. Congress effectively killed a $65 million-per-year processing industry by eliminating meat inspectors in these plants, effectively blocking the ability of the plants to process horse meat for consumption in other countries — another well-intentioned but bad policy.

The ban started in 2007, and the consequences have been dramatic. At a high point in 2005, the entire horse industry provided 460,000 full-time equivalent jobs. Since the ban, the number of unwanted horses has risen sharply, the market for horses has become saturated and the value of all horses across the board has dropped 40 percent. It’s safe to assume that a significant chunk of the nearly half-million jobs in the horse industry are now gone. Allowing USDA inspectors back into horse processing plants while ensuring that the animals are treated humanely will directly create hundreds of jobs and revitalize the horse industry, which will indirectly create or save tens of thousands of jobs.

The federal government has made many attempts and spent a lot of money to create and save jobs during this recession, with varying degrees of success. Ultimately, only sustained economic improvement will bring our unemployment rate down to acceptable levels. In the meantime, we should focus on the low-cost job opportunities that can be realized through minor policy changes. These jobs are the low-hanging fruit of this recession. Let’s pick them.

Charlie Stenholm (D-Texas) served in the House from 1979 to 2005. He is now a senior policy adviser with Olsson Frank Weeda Terman Bode Matz, where he lobbies on agricultural issues.