The great jobs debate: Ideas for how to put the unemployed back to work

[yllus]

On my commute to the office yesterday I saw a link to a feature being run by The Atlantic called The Great Jobs Debate: Ideas for how to put the unemployed back to work. In their words, they've "brought together some of the top minds in business, government, and the world of ideas, each to answer the same question: What is the single best thing Washington can do to jumpstart job creation?"

There are some good ideas and some bad ideas, mostly depending on what your personal ideology is. Personally, I thought these two were great:

Megan McArdle: Create a Special Job Credit for the Long-Term Unemployed

How to get employers to hire people who have already been out of work for too long? Traditional government solutions like job training have an absolutely dismal record. The only government solution to long-term unemployment we've ever found was to have World War II, and for various reasons, we're probably not going to reauthorize that particular program.

One suggestion is to give them direct incentives to choose the long-term unemployed over those who are already in work, or out of work for only a short time. How? We could exempt new hires from both the employee and the employer sides of the payroll tax, one month for every month that they were unemployed.

The result is a direct wage subsidy of more than 10%. But it is a time-limited subsidy, and one carefully targeted to those who need it the most. By the time the tax relief expires, these workers will have been reintegrated into the labor force. This will cost the government something of course--but not nearly as much as supporting them on welfare, disability, or early retirement--or the prison system.

Mike Haynie: Unlock Capital for Small Business

The United States should create a national microlending program positioned to provide ready access to capital to small business. It is widely acknowledged that small business represents the engine of job creation in this country. Small business accounts for approximately 50 percent of all private-sector jobs, and roughly 70 percent of all new jobs created in the past decade.

In today's environment, banks have much less incentive to extend a traditional small-business loan ($5,000 to $25,000), because the relationship between the transaction costs associated with processing that loan and the return on that investment to the bank often doesn't make economic sense. It's all about opportunity cost.

For example, consider that the transaction costs associated with processing a $10,000 loan to a small business and a $5 million loan to a large business are roughly the same. Also recognize that the return on investment to the bank (that is, the interest paid on the loan) increases proportionally with the size of the loan--the larger the loan, the more interest income generated relative to the "cost" of issuing and servicing the loan. Therefore, whether you are a large public bank with a fiduciary responsibility to shareholders or a small credit union responsible to its membership, there is an incentive to focus on larger and thus more profitable loans. Banks are in business to make a profit.

Research highlights that most small businesses, especially over the first five years of operation, require only small and incremental infusions of capital to sustain positive growth. A national microlending program positioned to provide capital infusions of $1,000-$20,000 to small business--created as a partnership between government and community-based lenders--would represent an compelling channel for small businesses to access start-up and growth capital.

 

[EagleKeeper]

Without demand for the products; you are just creating make work and building up inventories. The employer is not making a profit with the new worker and may be losing money

 

[EagleKeeper]

People have to have confidence to purchase goods which will create the demand.

Also, they need to change the mindset that paying an extra $1-2 above the lowest price to get a Made in America label, may be beneficial for all concerned

 

[her209]

Without demand for the products; you are just creating make work and building up inventories. The employer is not making a profit with the new worker and may be losing money

In other words, trickle up, not trickle down.

 

[Texashiker]

Want to put people back to work? Simple, enforce balanced trade.

For every i-pad that is imported, 1 has to be made in the USA.
For every CPU that is imported, 1 has to be made in the USA.
For every car part that is imported, 1 has to be made in the USA.

As long as people like Steve Jobs can keep their factories in China, America will always lagg behind in job creation.

 

[Schadenfroh]

Simple, enforce balanced trade.

For every CPU that is imported, 1 has to be made in the USA.

As long as people like Steve Jobs can keep their factories in China, America will always lagg behind in job creation.

For every CPU designed in America, the intellectual property must be surrendered to foreign firms to manufacture a licensed CPU on their soil or you do not get access to that market.

 

[a777pilot]

Before a Congressional committee recently a witness stated that US businesses pay over $1.7 trillion annually just to satisfy the paperwork and regulatory demands of the Federal government.

So get the government off the back of the consumers and the businesses and lets get back to the business of America, which is business. Governments do not produce jobs. Governments can only get in the way.....lately that is all they are doing.

The symbol of this current Administration ought be a chock ... it's only purpose in life is to get in the way.

 

[PrinceofWands]

The only step that matters is increasing the purchasing power of the masses. For years we've been fed a load of crap about that being done by lowering production costs, but while that has made some things more affordable, for the most part it just translated existing prices into profits (ie wealth concentration). Moreover it was accompanied by the eradication of the middle class, which is the ONLY class that can be large enough to be a consumer base (lower class not having the money, and upper class not being big enough).

Acknowledging the utter failure which is supply side economics the answer is painfully clear: get money into the hands of a large body of citizens who can exist as 'middle class'. Only when a sizable portion of the country has significant disposable income can enough goods and services be purchased to fuel business expansion and thereby lead to job growth.

While I'm in complete agreement on many of the protectionist ideas from posters above, it's moot unless/until the bulk of the country can afford to buy something. That means abandoning the debt model (for consumers and the nation), reversing wealth concentration, and encouraging REAL price competition (not profit competition) to drive down prices and keep them tied to real earning inflation to prevent future collapses (ESPECIALLY with regards to real estate). At the same time we need to somehow get people paid a middle wage (instead of having 50% of people making less than 25k/yr, and another 25% between 25k and 50k/yr). The bell curve is your friend, even with income.

 

[Bowfinger]

On my commute to the office yesterday I saw a link to a feature being run by The Atlantic called The Great Jobs Debate: Ideas for how to put the unemployed back to work. In their words, they've "brought together some of the top minds in business, government, and the world of ideas, each to answer the same question: What is the single best thing Washington can do to jumpstart job creation?"

There are some good ideas and some bad ideas, mostly depending on what your personal ideology is. Personally, I thought these two were great:

I think both ideas have potential, and both seem to be better than much of what we've tried so far. I also see a issues with both, but nothing insurmountable.

I think a targeted job credit for long-term unemployed would be quite attractive to a great many employers, and would offer a great incentive to offset the stigma the unemployed carry with most HR departments. The potential challenge I can see is some employers trying to game the system by creating unnecessary employee churn, laying off current employees to get the credit for replacement workers.

Re. a direct loan program for small business, does the SBA do that today, or does the SBA only work in conjunction with private sector lenders? Either way, I think this is a great idea. The big challenge will be the inevitable outrage from the right at "socialism" and from lenders who will object to the competition ... even though they're not serving the market adequately.

Thanks for the link. I don't have time to read the whole thing today, but will tonight.

 

[Macamus Prime]

You can't punish those who send manufacturing over to China; because you are a communist,... yet these same manufacturers are clearly support the communist regime,...

And, there is no way in hell an American can live on $10,000 a year. Because according to most of you, the average American worker demands:
* $150,000 for him/herself
* $200,000 for their union rep
* fully paid medical
* fully paid schooling
* bail money budget for all the criminal activity they get busted for every week
* drug habit money

Because if it wasn't for drugs/alcohol and a lavish lifestyle, $10K a year is more than enough for ANY American, gawd dammit!!

Also, the prices of everything should keep going up, because if you don't allow that, its communism as well. But, again, contributing to a communist regime is just fine.

/eyeroll

 

[Bowfinger]

Before a Congressional committee recently a witness stated that US businesses pay over $1.7 trillion annually just to satisfy the paperwork and regulatory demands of the Federal government.

That's a meaningless figure without knowing the credentials (and agenda) of this witness and the methodology he used to calculate that number. If that were solely the cost of superfluous paperwork, he may have a good complaint. If that number includes the cost of not pouring poisons into our air and water, not using leaded paints on children's toys, keeping bacteria out of our food supply, etc., then it's likely money well spent.

So get the government off the back of the consumers and the businesses and lets get back to the business of America, which is business. Governments do not produce jobs. Governments can only get in the way.....lately that is all they are doing.

The symbol of this current Administration ought be a chock ... it's only purpose in life is to get in the way.

Sorry, that's pure talking point, empty partisan nonsense. Business is surely an important facet of America, but it is only one facet, and unbridled greed over the last 30 years has created much of the mess we're in today. We wouldn't need nearly so much government regulation if businesses as a whole did a better job of balancing greed against behaving like responsible members of American society.

 

[ProfJohn]

Acknowledging the utter failure which is supply side economics the answer is painfully clear: get money into the hands of a large body of citizens who can exist as 'middle class'.

And how do you do that?

Government spending is at an all time high and it doesn't seem to be helping the middle class much.

Ever notice how the best economy of the past 50 years occurred during those years in which government spending was going down? Perhaps that is our solution...

 

[manimal]

And how do you do that?

Government spending is at an all time high and it doesn't seem to be helping the middle class much.

Ever notice how the best economy of the past 50 years occurred during those years in which government spending was going down? Perhaps that is our solution...

Nice try, the best economy of the last fifty years happened because demand was strong and wages rose because of strong growth and new markets being exploited. See how we can pull anecdotal evidence out of our asses too?

 

[GuitarDaddy]

The only step that matters is increasing the purchasing power of the masses. For years we've been fed a load of crap about that being done by lowering production costs, but while that has made some things more affordable, for the most part it just translated existing prices into profits (ie wealth concentration). Moreover it was accompanied by the eradication of the middle class, which is the ONLY class that can be large enough to be a consumer base (lower class not having the money, and upper class not being big enough).

Acknowledging the utter failure which is supply side economics the answer is painfully clear: get money into the hands of a large body of citizens who can exist as 'middle class'. Only when a sizable portion of the country has significant disposable income can enough goods and services be purchased to fuel business expansion and thereby lead to job growth.

While I'm in complete agreement on many of the protectionist ideas from posters above, it's moot unless/until the bulk of the country can afford to buy something. That means abandoning the debt model (for consumers and the nation), reversing wealth concentration, and encouraging REAL price competition (not profit competition) to drive down prices and keep them tied to real earning inflation to prevent future collapses (ESPECIALLY with regards to real estate). At the same time we need to somehow get people paid a middle wage (instead of having 50% of people making less than 25k/yr, and another 25% between 25k and 50k/yr). The bell curve is your friend, even with income.

Great post :thumbsup:


We keep trying to hide from the fact that the disappearing American middle class IS and has been the driving factor in our current economic downturn, and the reason an economic recovery has been so slow and anemic. The American middle class has for decades been the consumer engine that has driven the world economy and that engine is broken and failing.

During the housing boom and buildup to the crash the banksters tried falsly inflating the middle class by targeting the lower earners and convincing them, and themselves that all they had to do to become middle class was buy a house that was beyond their means. This was like throwing nitro on an old failing engine, it created a short term boost in economic growth and then a flameout. And it wasn't just the housing market that was manipulated, money was free flowing and practically any warm body that could sign a note was loaned money for cars and other large purchases that they couldn't afford.

 

[Martin]

And how do you do that?

Government spending is at an all time high and it doesn't seem to be helping the middle class much.

Ever notice how the best economy of the past 50 years occurred during those years in which government spending was going down? Perhaps that is our solution...

Ever notice how the best economy of the past 50 years occurred during those years in which tax rates were substantially higher than today? Perhaps that is our solution...

 

[a777pilot]

That's a meaningless figure without knowing the credentials (and agenda) of this witness and the methodology he used to calculate that number. If that were solely the cost of superfluous paperwork, he may have a good complaint. If that number includes the cost of not pouring poisons into our air and water, not using leaded paints on children's toys, keeping bacteria out of our food supply, etc., then it's likely money well spent.

I agree but the point is, there is way too much government interferrance and petty control.

Do you understand that the Federal government is now tell us stupid Americans what light bulbs to use in our homes? The ones with all the mercury in them, no less.

If you don't see that as a problem then I doubt we will ever have a meaningful compromise on anything.

....but then gridlock is our friend.

 

[yllus]

Want to put people back to work? Simple, enforce balanced trade.

For every i-pad that is imported, 1 has to be made in the USA.
For every CPU that is imported, 1 has to be made in the USA.
For every car part that is imported, 1 has to be made in the USA.

As long as people like Steve Jobs can keep their factories in China, America will always lagg behind in job creation.

For every CPU designed in America, the intellectual property must be surrendered to foreign firms to manufacture a licensed CPU on their soil or you do not get access to that market.

I think some protectionism would be healthy for America, but the simplistic model mentioned here would be disastrous. I live in a country with a recent protectionist history - it's the antithesis of competition, as domestic manufacturers quickly realize that they don't need to compete very hard on price or features with the rest of the world, and collude to raise prices.

I think the U.S. (and other Western nations) should consider a move to fair trade (full access to our markets = full access to yours), or at least limit trade with nations that don't share similar workers' and political rights as our own. And these days I also take less issue with government being interventionist in ensuring that major corporations remain in local hands.

 

[Texashiker]

I think the U.S. (and other Western nations) should consider a move to fair trade (full access to our markets = full access to yours), or at least limit trade with nations that don't share similar workers' and political rights as our own.

Markets like communist china will not allow either. No full access, nor rights for their workers.

With workers rights come improved wages, something that parasite corporations do not want to see.

 

[PrinceofWands]

And how do you do that?

Government spending is at an all time high and it doesn't seem to be helping the middle class much.

Ever notice how the best economy of the past 50 years occurred during those years in which government spending was going down? Perhaps that is our solution...

That really is the question. I'm not sure how to do it, but I know it won't be through ANY FORM of supply side, trickle down, top-down, monetary policy, deregulation, etc. Those are the bane of a healthy economy and nation.

I disagree with your final assertion. What you say is only true by defining 'the economy' in such a way as to make it look good (focus on gdp growth despite it being concentrated, focus on top 10% metrics, etc). The 'best economy' of the past 50 years (to me) was 50 years ago, when debt was lowest, middle class was strongest (considering debt and wealth distribution), population growth was shallower, etc. The only other positive economy I've seen in that time was part of the 90s, which was almost entirely the result of the tech boom and had NOTHING to do with positive policies.

 

[Theb]

Want to put people back to work? Simple, enforce balanced trade.

For every i-pad that is imported, 1 has to be made in the USA.
For every CPU that is imported, 1 has to be made in the USA.
For every car part that is imported, 1 has to be made in the USA.

As long as people like Steve Jobs can keep their factories in China, America will always lagg behind in job creation.

The majority of Intel's CPUs are made in the USA. Why don't we start by voting with our wallets before we add new and exciting regulations.

Edit: That said we also shouldn't be taking steps to make it easier to close plants in the US and move overseas like removing duties on Korean made DRAM

 

[GuitarDaddy]

That really is the question. I'm not sure how to do it, but I know it won't be through ANY FORM of supply side, trickle down, top-down, monetary policy, deregulation, etc. Those are the bane of a healthy economy and nation.

I agree that is the million dollar question. And I think there is no quick fix, it has taken us 30yrs to get to this level of wealth disparity and it won't be fixed over night. And it will take a mixture of foreign and domestic policies to regrow the middle class.

I definately support fair trade policies that restrict access to markets that don't share our commitment to fair trade and workers rights. I would also support incentives and or tax breaks for companies that create US jobs at or above target salary levels.

And as unpopular is it will be with our corporate overlords we need to increase the tax rates for the highest brackets to promote reinvestment and discourage hoarding cash at the top.

And we need to dramatically reward long term investment and try to redirect the emphasis from short term profits. The corporate atmosphere of maximize profits NOW and the hell with the future must be fundamentally changed.

 

[Atreus21]

And as unpopular is it will be with our corporate overlords we need to increase the tax rates for the highest brackets to promote reinvestment and discourage hoarding cash at the top.

What do you mean by cash hoarding?

 

[Dman8777]

The current budget is 3.8 trillion dollars and 1.6 trillion is unaccounted for. That's a deficit of 42%. People that support only spending cuts either haven't looked at the budget closely or they have unrealistic expectations. The budget could be cut by 42% and the world wouldn't stop but a lot of people would be much worse off. Crime would certainly increase and the economy would probably slide back into recession as a vast swath of America which depends on things like social security and medicare would stop spending immediately.

For the last 30 years, the wealth in America has been flowing from what was a large middle class to the top 10% due in large part to off-shoring but also to corporate lobbying and related corruption. At the same time, taxes on those at the top have been falling. Then a few years ago, America's financial sector (composed of those at the top of course) got creative and precipitated a colossal economic meltdown. Who benefits in any economic downturn? You guessed it, those at the top. Now to pick up the slack for this wealth redistribution, the price-tag for all the government's social programs has ballooned.

At this crossroads the country has a bevy of short-term and long-term problems. The short term problem is the continuing economic difficulties caused by a very slow recovery from recession. The long term problems are concentration of wealth, monnied interests dominating politics, and the lack of fiscal responsibility from our politicians.

I tend to agree with people who don't support tax increases based on the idea that our government has shown absolutely no inclination to control spending in recent history. The problem is that a shrinking middle class tax-base has wrecked havoc on the budget picture. When someone drops from the middle class into the lower classes, they not only stop paying the government money but they start collecting money.

Since all the wealth in America is moving slowly to the top, it seems reasonable to start taxing more at the top. Any income tax increase should be temporary though, intended to get the country through the current downturn. I say income tax because I think the capital gains need to be taxed as normal income.

I like Warren Buffets solution for our longer term problems. Combined with campaign finance reform and outlawing lobbying, I think we could right the ship pretty quickly.

 

[Jaskalas]

Ever notice how the best economy of the past 50 years occurred during those years in which tax rates were substantially higher than today? Perhaps that is our solution...

Ever notice how the economy boomed post-WW2, after the rest of the industrial world was utterly devastated?

Point being, you'll never get that era and its wealth back. It was unique.

 

[yuppiejr]

Great post :thumbsup:


We keep trying to hide from the fact that the disappearing American middle class IS and has been the driving factor in our current economic downturn, and the reason an economic recovery has been so slow and anemic. The American middle class has for decades been the consumer engine that has driven the world economy and that engine is broken and failing.

During the housing boom and buildup to the crash the banksters tried falsly inflating the middle class by targeting the lower earners and convincing them, and themselves that all they had to do to become middle class was buy a house that was beyond their means. This was like throwing nitro on an old failing engine, it created a short term boost in economic growth and then a flameout. And it wasn't just the housing market that was manipulated, money was free flowing and practically any warm body that could sign a note was loaned money for cars and other large purchases that they couldn't afford.

The people running around this country with a middle class victim complex need to get a fucking clue.

Free choice is a bitch, if the "middle class" elected to sign loan papers and turn their houses into a credit card there is nobody to blame but the middle class. All of the cash floating around made people and businesses lazy, now that the music has stopped and there aren't enough chairs who's really to blame? What's happening in DC is a reflection on a problem with the culture and the country at large.

We've been living in an age of false prosperity for the past 10 years, chasing bubble after bubble in pursuit of funny money from inflated tech stocks and real-estate idiocy backed up by a government bail-out that rewards failure and poor decision making. The products and services bought and sold with the fake money were created in response to demand from the public including the demand for cheaper goods made in China.

As much as people gnash and complain about the current state of things we have nobody to blame but ourselves... not dirty politicians (who we elect) or "banksters" who fed our demand for big houses full of shit we don't need. Real consequences (bankrupcy, homelessness, etc..) for people who made dumb ass decisions, individuals/families/corporations/banks, etc... would encourage smart behavior. Continuing the cycle of bailouts that reward failure and and witch hunts for people who fed into the madness is simply a chicken shit way to avoid taking responsibility. We have, as a country, gotten ourselves here and until we collectively take responsibility and begin behaving like self-sufficent adults that hold one another accountable for our actions we don't deserve prosperity.