Jobs: Part 2

In yesterday’s blog I talked about some of Dr. Douglas Woodward’s keynote address at this weekend’s South Carolina NAACP African American Economic Summit.  I discussed his latest research on the important role of small business our state and the prospects for the nation’s economy.

Dr. Woodward also made it clear that job creation is what we need.  Dr. Woodward believes that South Carolina lost its focus on creating jobs back in 2003 when Harvard Professor Michael Porter convinced state leaders to adopt a new bible for economic development centered around business clusters.  We created a whole new organization for cluster development—New Carolina, South Carolina’s Council on Competitiveness. 

It wasn’t that this cluster idea was bad, said Dr. Woodward, it was that the state lost its focus on creating jobs and instead just wanted to pursue wealth and raise per capita income.

Confused?  Let me give you a real life example of what happens in state government if the focus is on wealth creation and not job creation.

In 2005 the Legislature passed a bill amending the state’s job tax credit program.  Prior to this time only certain types of businesses (primarily manufacturing) that created 10 net new jobs were eligible for a tax credit on each new job.  The South Carolina Small Business Chamber lobbied very hard to open up the job tax credits for the first time to small businesses that created a minimum of two net new jobs.  A job was a job was a job we argued.  The House agreed and included this provision in the bill.

But the Senate then caved into the state’s big business community that argued that South Carolina should not be rewarding the creation of just any net new job but only jobs that paid far above the average per capita income in that county.  Generating wealth in the state by raising per capita income was THE goal, not creating jobs.  

Our response to this misguided economic approach was that getting an unemployed person into a job regardless of the pay would also raise the per capita income of the state.  But apparently our economic development leaders were only interested in raising per capita income from the top down, not bottom up.  Fortunately we prevailed in a House-Senate Conference Committee.

While we all would like more high-paying jobs in our state and pursuing clusters can yield rewards, we must get back to focusing on creating JOBS.  As Dr. Woodward’s research has clearly pointed out, we should start focusing on the business sector that is creating the most net new jobs already—our small businesses.