NCPA - National Center for Policy Analysis

Less Than Meets the Eye: Kerry's Plan for Job Creation

April 20, 2004

Sen. John Kerry has promised to create 10 million jobs by the end of his first term as president. However, according to a new report by Tax Analysts, though there will significant job growth by 2009, there is little reason to think Kerry's policies would be the driving force behind it.

The claimed 10 million new jobs are supported by a brief paper by Lawrence Katz, a Harvard University professor and former Clinton Labor Department economist, says Martin Sullivan of Tax Analysts. The memo correctly points out that if the U.S. unemployment rate drops from its current level of 5.6 percent to 4.1 percent -- the average for 1999-2000 -- there will be approximately 10 million new jobs over the next five years. However, Sullivan says that the report's assertion that Kerry's policies will bring about these results are at best without foundation and at worst duplicitous:

  • By the Kerry campaign's own calculations, 75 percent of the estimated job growth is a result of natural growth in the labor force, while 25 percent is attributable to a drop in the unemployment rate.
  • Thus, the Kerry campaign is essentially saying 7.5 million jobs will be created by the end of 2009 if the unemployment rate stays the same, and an additional 2.5 million jobs will created if the unemployment rate drops to 4.1 percent.
  • The report does not present any analysis to relate Kerry's proposals to the creation of 1 million jobs, much less 10 million jobs.

However, such economic analysis is "unlikely because it simply does not exist," says Sullivan. There is little evidence that suggests Kerry's job credit proposal, whereby employers are subsidized in the short-term for new hires they make, has any stimulative effect. Kerry's plan to cut the corporate tax rate may have a modest impact on job growth.

Sullivan concludes that Kerry's jobs plan "is arithmetic, not economics."

Source: Martin A. Sullivan, "Good Politics, Yes, but Can Kerry's Plan Create Jobs?" Tax Analysts, April 5, 2004.


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