What are U.S. political leaders doing about the nation’s jobs emergency? Next to nothing. Instead, House Republicans have plunged Washington into another senseless round of fiscal brinksmanship, jeopardizing economic recovery in their Ahab-style quest to destroy the great white whale of Obamacare.
Imagine, instead, that we had a functioning political system. What could Congress and the White House do to goose the pace of job creation?
Instead of turning to the usual (partisan) experts and Beltway interest groups for answers, why not put that question directly to U.S. job creators themselves? That inspired suggestion comes from John Dearie of the Financial Services Forum and Courtney Geduldig of Standard & Poor, who hit the road two years ago to do exactly that.
There are no blinding revelations here; most of their prescriptions are familiar to Washington policy hounds like me. But this only underscores that job creation isn’t some arcane branch of economics that only Nobel laureates can fathom. U.S. policymakers mostly know what to do – which makes their failure to act all the more tragic.
The jobs crisis is urgent and it’s eviscerating the American dream. Don’t be mislead by an unemployment rate, 7.2 percent, that though still too high is not vertigo-inducing. It doesn’t capture the full dimensions of the emergency facing working Americans. In addition to the 12 million who lack jobs, another eight million work in part-time jobs because that’s all they could find. So bleak are prospects that record numbers of people are dropping out of labor markets entirely. “If the labor force participation rate were the same as in February 2000, the pool (of employed workers) would be larger by 9.5 million people,” says economist Gary Shilling. Altogether, about 24 million Americans are jobless, too discouraged to look for work or stuck in part-time, low-paying jobs. And if monthly job growth continues at its current dismal pace, it could take a decade before unemployment falls to pre-crash levels.
Unlike free market ideologues, America’s entrepreneurs believe Washington can do quite a lot to support their efforts to create jobs. Based on their focus groups, Dearie and Geduldig highlight the following priorities:
Ø Boost the supply of skilled workers. Entrepreneurs say a talent shortage is the most serious constraint on their ability to grow.
Ø Fix “insane” U.S. immigration laws that keep skilled workers out and force foreign STEM degree holders to leave.
Ø Change rules that make it difficult for good ideas to get funded.
Ø Reduce the economic drag imposed by decades of regulatory accumulation.
Ø Lower and vastly simplify taxes on new enterprises.
Ø Promote economic “certainty” by getting the federal government’s macroeconomic house in order.
In response to these imperatives, the authors lay out a comprehensive and richly detailed policy agenda. They propose, for example, that Washington offer tax credits to students who graduate from college with technical degrees, and forge business-education partnerships to develop skill-specific training and certification systems. They urge Congress to eliminate the cap on H-1B Visas and create a special visa for foreign entrepreneurs who start a business in the United States.
Dearie and Geduldig echo business groups that call for easing Sarbanes-Oxley regulations that impose big compliance costs on small businesses, and that have made it prohibitively expensive for small companies to go public. And, full disclosure: Where the Jobs Are also endorses a Progressive Policy Institute proposal for an independent “Regulatory Improvement Commission” to prune outdated and duplicative rules.
U.S. lawmakers, the authors say, should foster economic confidence by gradually winding down public debts; shifting money from entitlements to research; overhauling personal and corporate taxes; expanding trade; and, modernizing unemployment insurance.
What’s striking about the entrepreneurs’ views is how utterly pragmatic they are. They don’t seem to have a dog in Washington’s witless “government vs. markets” fight. They know that a smarter, more strategic government that focuses relentlessly on the fundamentals of economic growth is critical to their success, and our country’s.
Marshall is the president of the Progressive Policy Institute.