Over the past 10 years, Georgia has served as the location for a wide-ranging experiment in economic theory. During that period, the legislature passed and governors signed dozens of bills that provide tax breaks or exemptions to a variety of businesses and other special interest groups. These bills were enacted in the belief that cutting taxes on business would spur a massive economic development boom and create thousands of new jobs for Georgia residents.
It was a very thorough field test, considering all the tax breaks that were put in place over the last decade. We have learned, however, that the experiment did not bring the results that supporters had promised. Last week, the federal Bureau of Labor Statistics said the state’s unemployment rate had increased for the fourth month in a row to 8.1 percent in August. This means that Georgia now has the highest jobless rate of all 50 states and the District of Columbia. Even Mississippi, which could usually be counted upon to hold down the bottom spot on the list, had a lower unemployment rate.
If tax breaks really were a magic ingredient for creating jobs, then surely Georgia’s unemployment rate would be one of the lowest in the nation. That obviously is not the case. The disclosure that the state’s unemployment rate is the country’s highest was not good news for Gov. Nathan Deal, who has made economic growth and job creation the centerpiece of his reelection campaign.
Deal suggested that the release of the unemployment numbers was part of some Washington conspiracy against him, but this is a trend that has been developing for quite a long time. The state’s jobless rate is now two points higher than the national rate of 6.1 percent. It has exceeded the national unemployment rate for 85 months in a row—a period of more than seven years that dates all the way back to the George W. Bush administration.
Deal has emphasized in his campaign the rankings from three media outlets that said Georgia was No. 1 in attractiveness to businesses that are thinking of relocating. He attributed those rankings to his administration’s efforts to make the state more business-friendly. “Since taking office, I’ve made it my top priority to make Georgia the No. 1 place in the nation to do business and create jobs,” Deal said after the most recent of these trade publication rankings was announced.
Deal’s Democratic challenger, state Sen. Jason Carter, responded: “Georgia has no business at the bottom. More than 380,000 Georgians can’t find work and thousands more have given up looking. He may think this is the best Georgia can do, but I know we can do better.”
The state’s high unemployment rate hasn’t happened because of anyone’s bad intentions. Most members of the General Assembly, whether Republican or Democrat, really do want to see more people finding work here.
This is also not something you can blame on one of the parties. Nearly all of the bills granting special tax treatment or exemptions for businesses were passed by overwhelming majorities among both Republican and Democratic legislators.
Carter has criticized Deal’s strategy for encouraging economic development and job growth, but he was as heavily involved as any of his Republican counterparts in approving the tax breaks. In the four years that Carter served in the Senate, he voted for most of the major tax reduction bills that were sponsored by Republican lawmakers and signed into law by Deal.
The great experiment that tried to link tax breaks with job growth has obviously failed to show the expected results. Regardless of who wins the race for governor, he should look carefully at the data and reassess the state’s plan for generating more jobs. It may be time to try another approach.
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