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Leveraging jobs in rural areas

David Gura Aug 16, 2011

Leveraging jobs in rural areas

David Gura Aug 16, 2011

Kai Ryssdal: This is Day Two of President Obama’s bus tour through the Midwest. Mostly standard fare so far. He’s held town hall meetings. He’s met with small business owners. He’s unveiled new programs, specifically those promoting job growth in rural parts of the country, a couple hundred million dollars in all: introducing small business owners to venture capitalists; helping small hospitals recruit new doctors; that kind of thing.

Couple of hundred million dollars isn’t much in this sized economy, so we sent David Gura off to find out how much difference a small investment like that can really make.

David Gura: Iowa’s got a lot of big warehouses. It is home to trucking companies, and those businesses are doing pretty well in the Hawkeye State.

Peter Orazem: It has nothing to do with any particular investment on the part of the federal government — unless that it’s that we have to make sure that we have, you know, roads that don’t have lots of potholes in them.

Peter Orazem teaches economics at Iowa State University. He says the freight business is booming because of where Iowa is.

Orazem: At the end of the day, the types of jobs that will be sustainable in any area depends on the comparative advantage of that area.

Orazem’s not sure this investment, targeted at just a few sectors, will do much for employment nationwide.

Orazem: There’s not a whole lot of evidence that investing in particular businesses have been particularly successful. The government hasn’t been that good at picking winners and losers.

James Galbraith is also skeptical. He’s a economist at The University of Texas. He says there are steps the government can take to make sure taxpayer dollars aren’t wasted. He says it should never go to fields that require expensive equipment.

James Galbraith: In general, the more labor-intensive the activity, the more service-oriented the activity, the more jobs you get.

And Galbraith says it’s important to keep tabs on where that money ends up.

U.C. Berkeley economist Sylvia Allegretto doesn’t think the president’s plan is big enough. She says the scale’s just too small.

Sylvia Allegretto: We have a jobs deficit that is massive and this is going to do very little in the short run to fill in that jobs gap.

With millions of Americans unemployed, maybe fixing potholes would put more of them back to work. But Obama can’t do that by himself.

In Washington, I’m David Gura for Marketplace.

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