Hamilton Project Discussion Paper

Bringing Jobs to People: How Federal Policy Can Target Job Creation for Economically Distressed Areas

ABSTRACT—

This paper proposes three solutions to bring jobs to distressed areas: customized job training programs for businesses and employees, advice and consulting services through the Manufacturing Extension Partnership program, and a package of grants for local services and tax breaks through a reformed and revitalized Empowerment Zone program. Built on evidence from regional economics research, these policies provide investments and incentives that increase employment and productivity in distressed areas. These programs, directed largely to small- and medium- sized enterprises, can have large effects on worker productivity and business competiveness, encouraging sustained employment and rising wages. Because these programs offer investments in workers, firms, and local services, they provide a higher return on government spending and are more cost effective than programs that focus on incentives alone.