Dave Swenson

Elected officials are keen to flash their job creation scorecard even though local and state government officials don’t really create many jobs. The economy in the aggregate creates the overwhelming majority of jobs, and some of those jobs locate in our cities, counties, and state. For elected officials, though, if it happened on their watch, ipso facto, they’ve created jobs. Credit is always claimed.

When job “creation” (see above) becomes the measure of public service performance, however lacking in substance or result, we inevitably get phony statistics, misleading inferences, or dubious claims. Sometimes politicians cherry-pick the numbers to make the best case possible. And sometimes politicians or their willing accomplices create brand new statistics.

Such is the current practice by the Department of Workforce Development in its reporting of the state’s gross over the month job gains (instead of net job gains) since Governor Terry Branstad was inaugurated in 2011. This self-serving economic distortion, which completely ignores job losses, has been well chastised by Bleeding Heartland, the Des Moines Register, and the Iowa Policy Project, but the Governor and his minions are undaunted. And it is doubly brazen considering the vast majority of all job gains in the state involved the long slow recovery from the great recession rather than any particular action of the Branstad administration, all of its questionable subsidies, trade trips, and ground-breaking ceremonies combined notwithstanding.

Concerns about the public’s perception of the importance of a particular sector or potential gains to the Iowa economy are also evident in a couple other examples not really involving our elected leaders directly. The first is the Bakken pipeline proposal now pending approval before the Iowa Utilities Board (IUB) that would carry North Dakota crude oil across the state to a refinery in Illinois. The economic impact report supporting that initiative contained inflated and misleading job impact claims, which I initially criticized here in Bleeding Heartland over a year ago.

The project, as would be expected, is heavily supported by both organized labor and construction trade groups because of the short-term boost it would give to the state’s construction sector, irrespective of the inflated original numbers. As we found out during the recent IUB public hearings on the proposed pipeline, to many members of organized labor, arguing against the Bakken pipeline meant you were arguing against labor and you were anti-job. Being pro-job, pro-labor, and pro-construction trumped all other consideration, no matter how salient. It didn’t matter at all to them whether the economic impact study had been done correctly: what really matters in Iowa are jobs, their jobs, and an approved pipeline would support the construction industry handsomely for a couple of years.

The second and a more vexing example is Iowa’s vaunted and very powerful biofuels industry, to include its equally vaunted and powerful agriculture allies. The Iowa Renewable Fuels Association, for example, purports that Iowa’s ethanol industry in 2014 supported a total of 42,400 jobs in the Iowa economy. Understood properly, that assertion would mean that if all of Iowa’s ethanol plants were shuttered, the state’s economy would contract by that number of jobs. But that’s a silly claim because, you see, the state had just 1,845 workers in its ethanol refineries in 2014. Once one accounts for a reasonable, research-based multiplier of all other jobs subsequently created in the state by those refineries, the best you can come up with is from 6,500 to 7,000 total Iowa jobs that exist but-for the ethanol industry. Yet the industry claims 42,400 jobs would be at stake – more than six-times the amount that conventional economic impact analysis would yield.

I first wrote about biofuels bloated economic impacts in a widely-circulated and cited staff report in 2006, Input-Outrageous: The Economic Impacts of Modern Biofuels Production. That research was subsequently validated by Sarah Low and Andrew Isserman (2009). Still, even though the inflated claims of the biofuels industry had been called into account, the industry nonetheless plowed ahead completely undaunted and continues to publish its laughable and widely quoted job impact claims.

A sense of job creation capacity, whether contrived or real, is the gold standard of political worth in our cities, state, and nation even though politicians create very few jobs on the margins. Special interests understand this, too, and when they bring something before the legislature, whether it is ag-related, energy-related, environment-related, or whatever-related, you can bet job impact numbers are likely part of the pitch. I know because, on an annual basis, a range of Iowa interest groups ask me to do economic impact studies for the explicit purpose of shaping the public’s and legislators’ perceptions of the value of what they propose. Everyone knows what gets funders’ attention.

But it is often a tainted process. The reason the ethanol industry can get away with “outrageous” job creation statistics or the governor can introduce a phony but self-serving job metric into the public arena is because, by and large, the public has been trained to respond positively to cynical and distorted portrayals of job creation rather than the substance of actual economic change.

This is all done through very sophisticated and expensive public relations efforts and contrivances. And so long as elected officials and special interests succeed in manipulating public perceptions, they will get away with, and continue to use, bogus job creation claims.