U.S. Sen. Al Franken will introduce Tuesday a $10 billion jobs-creation bill intended to put more Americans back to work by the end of the year through small businesses hiring and public projects.
The bill, which could end up as part of the Obama administration’s jobs plan, would employ contractors to refurbish energy-leaking public schools, offices and housing.
Franken is eyeing a piece of the unspent money from the $750 billion bank bailout. The money would be used for wage subsidies for qualified new hires by businesses of less than 500 employees and government-hired contractors in a bid to put 500,000 people back to work.
About $5 billion would go to local governments to spend on contractors who will hire idled workers to install energy-efficient doors, windows and heating and air-conditioning systems in older public libraries, schools and other buildings.
“Congress must enact legislation that quickly and efficiently creates jobs,” Franken said Tuesday. Dubbed the “cash for jobs” plan, Franken said the bill “will boost the economy where we need it most — on Main Street.”
The Franken legislation dovetails with plans by Obama, who is expected to announce Wednesday initiatives to return several million Americans to work this year and expand certain tax breaks for the middle class.
Franken’s bill relies in part on the research of Tim Bartik, an economist with the Upjohn Institute in Michigan, who says the cheapest, fastest way to reduce unemployment, now at 10 percent nationally, is through targeted wage supplements.
Bartik studied a Minnesota wage subsidy program that put several thousand workers back on the payroll after the 1981-82 recession. The economist has urged the Obama administration to dedicate up to $30 billion annually toward wage subsidies targeted at small businesses and overwhelmed nonprofits, who provide transitional housing, food shelves, job counseling, day care and other services to families who have lost one or two bread winners.
Franken’s bill, and a similar one expected to be introduced this winter in the Minnesota Legislature, is targeted at small to medium-sized businesses that want to add equipment and employees but have been unable to get working capital from nervous bankers.
The Franken job creation subsidy would be available for 50 percent of wages, up to $12 per hour over the first nine months of employment. Employers that hire veterans who have returned from Iraq and Afghanistan would be eligible for a higher subsidy of 60 percent.
Franken also would create jobs to retrofit hundreds of public buildings with energy-efficient doors, windows and heating and air-conditioning systems. Franken’s staff anticipates the $10 billion bill will be part of what is expected to be a $100 billion-plus Senate bill of job incentives and tax breaks for the middle class.
Without job subsidies for small business, Bartik estimates based on his studies of employment after past recessions that it will take two years to seriously dent the nation’s 10 percent unemployment.
Bartik’s research indicates that the $787 billion 2009 fiscal stimulus, based on Council of Economic Advisers figures, “suggest that the stimulus bill has added [or saved] 1.5 million jobs so far and that it may add another 2 million jobs the end of 2010.”
Bartik estimates that wage subsidies cost about one-third of the $100,000-per-job yield created by the general stimulus bill, which was targeted at capital intensive public-infrastructure projects and retaining police, teachers and other public employees.
