January 10, 2012 02:40 PM UTC

Pink Slips

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• by: Konola

Romney slipped on a pink slip on his way to the New Hampshire coronation of his candidacy. The past two days have been a slug fest, with most of the blows landing on the GOP front runner. I was wondering when this story was finally going to surface.

When I ran for office I ran on a platform of creating jobs. I had spent the previous decade working in an industry that used federal programs to encourage jobs creation in low-income communities. Most federal programs funding not-for-profit lenders have a requirement that a minimum number of jobs must be saved or created in exchange for the receipt of taxpayer money. The amount may have changed, but when I was involved  in the business, there needed to be at least one job saved or created for each $50,000 of federal support.

I always questioned the measurement of jobs saved. It was easy to see the creation of a job, because the number of jobs in a company would go up. It was harder to say that a job was saved. Usually, in the world of CDFIs, the definition of a job saved centered on a scenario where the owners of a company were planning to retire and would close the business if a new owner could not be found.

Romney has been running on his experience in the private sector during a prolonged recession where all of America is focused on unemployment statistics and the brutal fact that high unemployment begets high default rates on mortgages. When more properties are sold through foreclosure than through real estate listings because a family is moving up, the net result is falling property values. All of us have seen  equity in our homes disappear or shrink since 2008. Home ownership was once thought to be the safest possible investment other than cash, and now there are articles written about why renting may be better than owning.

Romney’s private sector experience was not as a jobs creator, it was as a corporate raider. Sure, there were some investments where the company survived; the Weather Channel is one such investment. But there were many more companies that were dismantled, with the workers losing their jobs and pensions and investors pocketing millions. That story finally hit the pages of the Wall Street Journal, and the role that Romney played in destroying jobs, not creating them, is finally the hottest topic in campaign reporting.

Bain didn’t measure its results by the number of jobs saved or created. The measurement was in the return on investment. After investing about $1-billion, the company had about $2.5-billion in gains. If the federal funding mandate for jobs were imposed, the expectation would have been that 20,000 jobs were created or saved. When Romney first ran for office, he said that number was 100,000 jobs. Later he said that number was 10,000 net jobs. At the latest number, the federal programs produce twice as many jobs as Romney did during his private sector experience with the same dollar investment, and the federal programs don’t destroy any jobs in the process.

Homework

http://online.wsj.com/article/…