There has been an ongoing debate over the Obama administration’s economic recovery plan, which significantly overstated the number of jobs created or saved through the economic stimulus program. An Associated Press review recently found that two thirds of the jobs that were claimed to have been saved were overstated due to shenanigans like counting salary raises as saved jobs and inflating many more jobs as being ‘saved’ than there were even people working for the employer. The White House has promised to do more extensive reviews in the future.
While various black pundits on cable TV nitpick over the exact jobs figure and its ramifications for black America, they tend to overlook a fundamental point: government directly creates neither wealth nor jobs, because it is not a producer. The federal government gets its money from three sources: taxes, borrowing from other countries or future generations; or printing money. Thus, the very concept of a government-driven economic recovery is flawed.
It’s the government taking money from us – thinking it can spend our own money better than we can – and spending it on what it views as important. Government isn’t growing the pie, but merely taking peoples’ pie slices and moving it elsewhere in the pie tin. Government jobs like teachers, postal delivery folks, cops, fire department, road construction workers, etc., derive their income from taxpayer dollars. Our confiscated tax dollars – which would’ve been used elsewhere, creating jobs elsewhere depending on our free market choices – make these jobs possible.
Yet even within the economic recovery plan’s diversion game, the stimulus money is going to favored states and special interests with political pull. Black people, who are not part of this favored group, aren’t seeing these taxpayer-sponsored stimulus jobs created or saved. A ProPublica analysis of stimulus spending shows that black-owned firms have received only two percent of federal stimulus contracts. The black unemployment rate remains higher than it was last year – 15.7 percent in October 2009 compared to 11.3 percent in October 2008.
What black America must focus more on is not a government-driven economic initiative, but the productive engine that drives much of America’s economy and provides jobs: small businesses. About 13 percent of all Americans work for the federal, state, or local government. Of the vast majority who are not public employees, small businesses employ just over half of all private sector employees. Small businesses have also created 64 percent of new net jobs in the past 15 years in America.
Those among us who support the government-driven initiative over small businesses to combat black unemployment and close the racial gap in employment will continue to be disappointed. A key reason why black unemployment rate is always higher than the national average is that 21 percent of blacks work for the government at the federal, state, or local level – more than other racial groups – while only 5.2 percent of blacks are business owners (one third to half the rate of other racial groups). When you add the percentage of blacks on social welfare, Social Security, and other programs, we’ve got a sizable minority of black America missing in action in the arena where wealth and jobs are created.
Black-owned businesses are more likely to hire black workers, yet we have such a significant percentage of blacks not in the sector where wealth and jobs are created. Without an increased emphasis on capitalism instead of growing government, we will continue to feel higher-than-the-national-average unemployment pain. No government package will address this issue better than black America.
If we deploy our combined GDP of close to $1trillion to organically build up more businesses and have dollars within our communities turning over less than once before exiting elsewhere, but five times or more, we will be in a much better place.