COMMENTARY

What Have You Done to Create Jobs Lately?

January 2006

By Donald J. Pfundstein*
for New Hampshire Business Review

Good news from Bangalore. It seems that there is a limit to India's ability to absorb outsourced jobs.

In John Larkin's recent article in The Wall Street Journal, "India's Talent Pool Drying Up," the author describes a typically mature employment market. As the talent pool of qualified workers is drained, competition for talent accelerates. So do salaries. This makes the prior hotbed of offshore investment less attractive to fleeting capital.

If India does not host the outsourced jobs which our economy can no longer efficiently provide in the States, another area of the globe will take India's place. That has been occurring for some time now. Mr. Larkin also suggests that Bangalore's shortage may provide an enhanced opportunity for the Philippines where English is widely spoken.

I subscribe to the school of thought that acknowledges the long-term economic advantages to the United States economy created by offshore investment, including the outsourcing of jobs. However, this has always been a difficult story to sell our displaced workers. Their focus is necessarily short-term. Creating new jobs is a much better story to tell.

I have often asked, "What have you done lately to create jobs?" Governor Lynch recently applied for two substantial federal grants designed to diversify and expand the North Country's economy. The grants seek funds to upgrade workers' skills, create new innovative programs and to diversify the economic sectors in our rural counties.

The governor's efforts also will help produce jobs. At a minimum, they will help improve and retain the ones we have.

Governor Lynch acknowledged the help provided by the New Hampshire Community Technical College in Berlin, the Dartmouth Entrepreneurial Network, Androscoggin Valley Economic Recovery Corp. and local economic development groups and school districts. Our schools' involvement is critical. Education is the fundamental laboratory of job creation.

Return to Bangalore for a moment. Mr. Larkin's article noted that its antiquated higher education system is at the heart of India's difficulties. Continued investment in our education infrastructure is essential. Collaboration between education and business also is necessary to revitalize not only the North Country but to create jobs for the rest of the state.

There's something you can do to help create jobs. The New Hampshire Legislature continues to consider House Bill 678. The bill is currently before the House Ways and Means Committee. HB 678 is designed to reduce the insurance premium tax from 2 percent to 1 percent on the property and casualty lines of insurance you purchase.

As I reviewed in detail last April ("Insurance Premium Tax Cut is a Wise Investment," April 2005 at gcglaw.com), Ernst & Young has forecasted that this improvement will create over 1,600 new jobs over the next several years. It also will add over $61 million annually to New Hampshire personal incomes.

Sure, there is an investment cost associated with this job creation. When isn't there? When local government increases in revenue are factored in, the net state and local revenue lost - the true investment - is a mere $2.6 million. Would you invest $2.6 million of foregone revenue to create over 1,600 jobs and $61 million in personal income each year? You bet you would.

Timing is everything. The state currently has a substantial surplus. The Rainy Day Fund will be replenished. The timing is perfect for adoption of HB 678. Investing when the glass is full is a painless way of helping to fill the glass when it runs empty.

What have you done lately to create jobs?

*Donald J. Pfundstein is admitted in New Hampshire.

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