On Thursday, the country's leading CEOs, economists, and a few labor leaders will travel to the White House to discuss a national unemployment rate that has broken into the double digits for the first time since the Reagan era.
That the president is singling out job creation is a positive step. The challenge is for the "jobs summit" to go beyond short-term strategies designed only to ease current economic woes and help elected officials in next year's Congressional races. Instead, it must look for solutions that deal with structural problems in the way we manage the American economy.
The rules by which our economy operates have changed since the 1970s. At that time, lawmakers began promoting economic competitiveness as an end in itself, with the hopes that a rising tide would lift all boats.
With this flawed theory came the erosion of three institutions that helped make life less precarious for working people: collective bargaining, trade policies that balanced healthy domestic markets with active foreign exchange, and a social safety net that could catch those thrown by the volatile business cycle.
Absent these supports, the American class structure morphed from something that looked like the fat man at the circus--a figure with a well-nourished mid-section--to one that resembles an hourglass, bulging at the top and bottom but holding very little in the middle.
World's Changed, So Now What?
There's no going back to the past. We no longer live in an era of industrial production and insulated borders. But while the institutions of the last New Deal may not be relevant in their old forms, they must be refashioned so that three key players--individuals, government, and the private sector--once again share the risk associated with the inevitable fluctuations in our economy.
Up until this administration, individual workers have been left to weather economic instability on their own. The Obama administration has sought to make government take up its share of the burden (although, owing to the past success of Republicans in "starving the beast," the share it can manage is now limited). The only actor left that hasn't stepped up is the private sector.
As a substantive approach to the jobs issue, there are three specific strategies that would move us back toward a situation in which all actors evenly share responsibility in times of economic downturn.
1) Make Jobs Pay
First, in order to produce jobs that allow Americans to enter the middle class, we need to pass living wage laws and to restore the right of collective bargaining. According to the Bureau of Labor Statistics, nine of the 12 fastest-growing occupations in the country are jobs that do not require a bachelor's degree. These include such work as retail sales, customer service, home health aid, and waiting tables. In many parts of the country these jobs pay less than $10 per hour--and the national average for wages in the service sector is not much more than that.
Too often, reforms that would strengthen workers' ability to organize and improve job standards are regarded as the concern of a special interest group. But unless employees have effective ways of pushing for fair wages, they simply will not be able to start spending again without building up huge debts. Yet this type of consumption is precisely what the economy needs in order to regain its health.
2) Public Return for Public Investment
Secondly, President Obama should make sure that public investments in the private sector produce concrete returns for the American people. At one point in our history, government played an important role in directly creating jobs. Today, it can help in the short term with public jobs initiatives. But over the long haul it simply does not have the money to drive a recovery in this way.
Government should instead embrace a new role by making sure that when it invests in the private sector--whether through bailouts like the one for the banking industry last fall, or through its support for the greening of the economy--that its subsidies are linked to specific standards of job creation. This should also apply at the local and regional levels, where government is constantly providing tax breaks and other incentives to the private sector to spur growth.
3) Fair Global Trade
Trade is a central reality of our global economy, and this is not going to change. Thus, the question is not whether we will trade, but rather how we do this. Business continually works to protect its patents and intellectual property--often with substantial support from U.S. trade representatives. However, if policymakers express the same concern for the interests of employees, insisting that our trading partners uphold the right to organize for their workers, corporate lobbyists assert that we cannot impose our values abroad.
This creates an outrageously imbalanced situation in which our trade representatives regularly go to bat for the rights of compact discs, but say nothing about the freedoms of working people worldwide.
In the same way that we have to make jobs pay in America, we must end the constant downward pressure on wages that results from this imbalance. The key to making that happen is insisting that employees in all parts of the world have the ability to bargain freely over the conditions of their labor.
While the White House summit is a move in the right direction, the Obama administration could easily remain stuck in a cycle of promoting competitiveness for its own sake and not challenging business to accept its share of responsibility for mitigating the impact of our economy's unavoidable ebbs and flows. Creating jobs that pay, demanding public return for public investment, and promoting fair global trade would each serve as a means breaking this cycle, and of creating new forms of the institutions that once guided a prosperous America.