Projections vs. Reality — Should Politicians Make Job Creation Claims?

In a recent MLive.com column, political pundit Tim Skubick criticized Gov. Rick Snyder for not projecting how many jobs his tax cuts will generate.

“Well, when it comes to the governor’s much-touted $1.8 billion tax cut for business, just one month old, there is no accountability on how many jobs it will create. Zero. Nada. Zippo,” Skubick wrote.

“You mean with all his business connections he couldn’t find some schlub to run the numbers into the computer and come out with an answer on the other end?” Skubick added.

But Michael LaFaive says Michigan residents have had their fill of erroneous job projections from politicians.

“There was no accountability for Gov. Granholm who gave out predictions like candy on Halloween,” said LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy. “Have we already forgotten, ‘In five years, you’ll be blown away'?”

A report from Michigan's Auditor General found that just 28 percent of the new jobs the Michigan Economic Development Corp. projected actually came to fruition. For example, Google located one of its headquarters in Ann Arbor in 2006 and stated it would bring in 1,000 jobs within five years. At the time Granholm called it a “huge, huge, huge, huge” deal. This week, AnnArbor.com reported that Google created just 300 jobs in Ann Arbor.

MIRS News researched the MEDC's job claims under Gov. Granholm's tenure and reported that the MEDC claim for total jobs created was 1.4 million, or 29 percent of the state’s entire labor force. Yet, Michigan had the highest unemployment rate in the country from April 2006 through April 2010 under the Granholm administration.

And Snyder also ended the practice of the MEDC quoting “indirect” jobs in its announcements.

Indirect jobs are jobs created in the local economy due to capital investment, operating expenses and payroll of a facility’s expansion. They are not tracked after the fact, however, to see if they ever happen.

“Politicians have an incentive to goose up the claims for good PR and they do so knowing many people who first heard the claim will forget their association with it when it doesn’t come true,” LaFaive said. “If anything, Mr. Snyder deserves applause for being responsible.”

LaFaive said it’s better for the economic experts to track the job growth as it happens and then measure the effectiveness of Snyder’s programs.

“Hindsight of scholars is much better than the foresight of politicians,” LaFaive said.