President Obama is correct to be going after Mitt Romney's questionable record at Bain Capital. As fellow blogger Robert Scheer pointed out, 90% of the deals at the end of Romney's tenure involved dismembering once-thriving industries and selling off the parts, destroying jobs in the process.
But Obama's got to go one better and figure out how to tackle America's job crisis. Neither Reaganomics nor Keynesian approaches to our stagnant economy will work. Economist Paul Krugman's contention that "If we were to ... rehire the schoolteachers (and) firefighters ... we would be a long way back towards full employment" is dead wrong. Stimulating spending simply keeps Wal-Mart checkout clerks and Chinese factory workers on the job instead of creating well-paying American factory jobs.
Tackling the job crisis is the single most important issue facing Americans. The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession, according to federal statistics. Projections for overall job growth by the Bureau of Labor Statistics look pretty grim when it comes to well-paying jobs. According to its 2012 Occupational Outlook Handbook, the occupations with the fastest growth -- adding a mere 1.3 million jobs between 2010 and 2020 -- are personal care aides and home health aides, with a median wage of about $20,000.
Here's what Obama needs to do:
Step One: Bring well-paying American jobs back home: Despite Bill Clinton's claim back in 2000 when he signed the legislation permitting China's entry into the World Trade Organization that it was a "great day for the United States," it's been a disaster for the U.S. economy and employment. While the U.S. trade deficit with China was $6 million back in 1985 last year it has ballooned about $300 billion -- the largest in the history of the world.
China's entry into the WTO has been the major driver in the loss of more than 56,000 U.S. manufacturing facilities since 2001. In its 2008 report "The China Trade Toll," the Economic Policy Institute estimated that 2.3 million U.S. jobs were lost between 2001 and 2007 alone and most of the laid off folks who were lucky enough to land new jobs lost an average of more than $8000 a year in wages. And it's not just factory jobs that are affected; in 2009 employment among U.S. scientists and engineers fell by 6.3% compared to the overall drop of 4.1%. Alan Blinder, a former vice chairman of the Board of Governors of the Fed, estimated that between 30 million and 40 million high-end U.S. service sector jobs could be outsourced. Incredibly, there is no government agency that monitors plant closures and offshoring/ outsourcing of jobs.
The other huge and rarely discussed job-killer is automation. Computers do everything from processing airline tickets to analyzing medical images. Even jobs that automation experts didn't think could be automated -- like driving cars --have been mastered by Google and the Defense Advanced Research Project (DARPA). Not only does your iPhone's Siri feature understand commands but Lionbridge's Geo-Fluent translates written words (as does Google Translate) and search software analyzes legal documents at law firms. As a result of automation, the U.S. produces almost one quarter more goods and services today than it did 13 years ago with almost the same number of workers. It's "as if $2.5 trillion worth of stuff -- the equivalent of the entire U.S. economy in 1958" -- has vanished.
We need to convene a Build a Future for American Jobs task force comprised of labor leaders AND manufacturers that would address this issue: Along with Alan Blinder, it should include Richard McCormack, the author of "Manufacturing a Better Future for America," published by the Alliance for American Manufacturing, a partnership of manufacturers and the United Steelworkers; fellow blogger Leo W. Gerard, President of the United Steelworkers and a member of President's Advisory Council on Trade Policy and Negotiations; Andrew Liveris, CEO of Dow Chemical and the author of "Make it in America: The Case for Re-Inventing The Economy;" and Andy Stern, former president of the SEIU and a member of the National Commission on Fiscal Responsibility and Reform as well as the Council on Foreign Relations U.S. Trade and Investment Policy Task Force.
Step Two: Invest in training workers for 21st century jobs: According to Manufacturing a Better Future, the U.S. spent a paltry 0.02 percent of GDP on workforce training and education in 2007, the lowest among OECD member countries.
Step Three: Stop dithering about whether to lower the interest rates on student loans for college degrees. Aim to ELIMINATE student debt by increasing taxes on the rich so we can at a minimum triple the typical Pell Grant -- a "GI Bill for Everybody." Here's the irony -- while recently students in Quebec went on strike over the province's plan to increase tuition -- to a measly $2465 from a measly $2144, l American students are saddled with more than $1 trillion in student loan debt. As I pointed out in my book, America, Welcome to the Poorhouse, of the 30 OECD countries, the U.S. is the third lowest spenders when it comes to higher education. More generous college subsidies will increase the spending power on the part of recent college grads who will no longer be saddled with student debt along with encouraging more blue collar kids to pursue a college education.
Step Four: the Department of Labor should be assigned the responsibility of creating a Household Wealth Index. Somebody's got to take the job of measuring America's household wealth away from the Fed, given its abysmal job at interpreting/reporting its grim findings when it conducts the Survey of Consumer Finances, as I pointed out in a previous blog. The Household Wealth Index would be published annually and measure outsourcing and automation's effect on job growth, along with overall wage growth, 401(k) asset growth -- and whether Americans are on target for adequacy -- the decrease in household income spent repaying student loan debt and the increasing number of college graduates.
Any more ideas for getting America back to work? I'm all ears!