Government Jobs Programs Destroy Jobs

From Thomas J. DiLorenzo

In an effort to spur economic development, several bills have been introduced in Congress to resurrect Depression-era “public works” programs. Such legislation has been heartily supported by organized labor and other interventionist groups.

But such programs cannot reduce unemployment any more than the Depression-era programs did. The unemployment rate was higher in 1939—despite millions of workers placed in government jobs by the Roosevelt administration—than it was in 1.931 on the eve of President Roosevelt’s election.

The reason why government jobs programs cannot create jobs is straightforward: Even though the programs may “create” jobs for some workers, the resources to pay for the programs must be extracted from the private sector. Taxing the private sector reduces its ability to create jobs, so, at best, government jobs programs can only alter the composition of employment, not the total volume. More government jobs are created, but at the expense of fewer private-sector jobs.

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