When it comes to jobs, can the U.S. walk and chew gum at the same time?
After several months of robust, promising job creation, the economy only added about 120,000 jobs in March, barely enough to keep up with population growth. Last week, the number of claims for unemployment also jumped up. Maybe we're on the road to recovery from the Great Recession, but when it comes to jobs, the after-effects are still haunting us.
We're also facing a historic shift in the nature of work -- one that could turn out to be as extraordinary and wrenching as the Industrial Revolution. The combined impact of technology and globalization mean many businesses can do their work as effectively and more cheaply with fewer employees in the United States. If they can -- and if that's what their competitors are doing -- then they'll automate and move jobs offshore. Those jobs aren't likely to come back just because the economy picks up.
This means we need to do something we just aren't good at: having a serious debate on how to tackle a near-term problem while also looking at what to do for the future. As the candidates for president and Congress begin offering up their ideas on "jobs," voters need to consider whether their proposals are aimed at creating jobs quickly or whether they're aimed at strengthening the job picture over the long haul, say the next decade or two.
The truth is the country really needs both, but we can't expect short-term cures to fix long-term problems (like job losses due to globalization or technology), and we can't expect long-term solutions to kick in quickly. You probably won't hear any subtleties like this on the campaign trail. Generally speaking, politicians are in the confusion business, so drawing these kinds of distinctions isn't their strong suit. Here's a quick tour of some of the jobs ideas out there and their short-term and long-term implications:
Cut payroll taxes: According to studies by the Congressional Budget Office (CBO), this is one of the better strategies for persuading employers to hire, and in a relatively short period of time. But unless we find some other way to fund Social Security and Medicare, this can't possibly be a long-term solution. Both programs are paid for by payroll taxes, and both face serious long-term funding problems. Not collecting these taxes for years would make these shortfalls even worse.
Cut income taxes: This gives people more money in their pockets, and that can bolster consumer spending and help merchants preserve existing jobs -- maybe they can even expand a little. But when the CBO looked at 11 different ways to create new jobs quickly, this idea actually came in near the bottom. Over time, low tax rates can encourage wealthier Americans to invest in new ventures or stocks, which does support job creation over time. But those potential advantages have to be weighed against the country's budget problems and our mounting federal debt.
Have the government jumpstart big infrastructure projects: If the projects are "shovel-ready" (everybody is on board with the plans and the money), this can create jobs quickly. But if they're not, getting all the approvals and raising the additional money can take years. This has been one of the biggest criticisms of the $787 billion "stimulus" program -- rightly or wrongly, people expected bigger, faster results than they actually got. Obviously, construction projects don't provide jobs forever, but major national infrastructure improvements like improving the electric grid can take decades to build. Plus, improved energy, communications, and transportation networks lay the groundwork for economic development in the future.
Extending unemployment benefits: This does preserve and create jobs in the short term. When unemployed people have an income, even a small one, they're more likely to spend at local businesses, so those businesses are less likely to lay off workers and more likely to hire. The CBO gives this strategy a high rating for helping create jobs quickly. But one of the most troubling problems we're facing is the growth in long-term unemployment, where people struggle to find work for years. And the longer you're unemployed, the harder it is to get back in the workforce. Unemployment benefits help people keep food on the table, but they don't help get them back to work, especially when people's skills are out-of-date for today's jobs. Plus, supporting people who aren't working for very long periods of time can become divisive. Eventually, a lot of the people who are working may come to resent paying for those who don't, especially if they suspect that some people on unemployment aren't really doing their best to find jobs.
Investing in scientific research and cutting-edge technology: Again, this is mainly long-term. It provides some jobs for researchers and college professors when the grants come in, but discovering and commercializing innovations that open new industries and create thousands of jobs -- well, that just doesn't happen quickly.
Pursuing more trade agreements: Opening up foreign markets for U.S. products can lead U.S. companies to beef up their work forces to meet the new demands, and most economists say that trade is good for jobs over the long haul. In the near term, though, some companies may lose business, reduce their work forces, or even close due to foreign competition. On the other hand, not trading with other countries could turn out to be even worse for jobs.
Politicians have a knack for making their ideas on jobs (and everything else) sound quick and easy, but truth is more complicated, as well it should be. The United States needs a strategy to help people who need jobs now, and we need a plan to create good jobs for Americans in the years to come.
Co-authored with Jean Johnson.
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