Itâ€™s Time to View Good Jobs as a National Resource
On Tuesday, President Obama announced a modest but appropriate plan to stimulate job growth in the near-term. For small business, the traditional engine of rebound job growth, he touted tax breaks, tax credits, and access to capital. On the energy front, he talked up a “cash for caulkers” program. In the big-ticket category, he pushed for an initiative to rebuild and expand infrastructure. All of the initiatives are fine as far as they go, but they will not stimulate even a fraction of the jobs it would take to stem populist anger over the issue.
By November 2010, populist anger over joblessness will overshadow charges of overspending, big government, or the deficit, the three primary themes of Republican attack. But unless a couple million jobs are recaptured in the next eleven months, nerves will be raw, bank accounts will be empty, and the great drifting center will be subject to Republican claims that no one can create jobs like they created jobs in the good old days.
As pointedly misguided as this rhetoric is, expect the gullible to be swayed, to once again vote against their own interests while buying freedom-brand snake oil. Why? Desperation—pure, simple, and unadulterated. While the devastating effects of job loss have cut across every sector of the working public, this time, educated white, middle-aged professionals and skilled workers have been hit like never before. Once they would have been called breadwinners. Today, they are called redundant. There is no guarantee that the economy of the future has any real need for all of them. While numerically there are more men in this category, women are deeply affected, too.
It’s not that there is anything wrong with them. Their skills are strong, and their resolve is steeled by necessity and debt. There are just too many of them. And—given their salary histories—they are too expensive.
Jobs are People, Too
As Robert Reich said in a recent interview, “Many Americans won't be rehired unless they're willing to settle for much lower wages and benefits.”
Reich, whose analysis I value—and who should be in the White House policy camp—thinks that we need “permanent new investments in the productivity of Americans.” Or you could just say we need permanent new investments in Americans.
For 15 years we have taken jobs for granted as some kind of magical outcome of a humming economy. We were so entitled by circumstance that we literally squandered jobs. Good jobs. And we did it to jank stock prices. We right-sized, outsized, capsized, outplaced, offshored, and deep-sixed millions of them. And now, as corporate managers and small business owners contemplate rebooting their operations in the wake of the recession, their first thought is, “How can I keep labor costs down?”
The problem is that we don’t view jobs as a resource—a national resource akin to a natural resource. If you go far enough into the logic of buying labor, you realize we have onshored jobs instead of using homegrown talent because it’s easier. Take the issue of H-1-B visas, for example.
“When I joined I.T. in 1992, 95%+ of engineers where I worked were U.S. citizens and permanent residences. Today, 50%+ of engineers where I work are H-1-B (mostly from India) and another 35+% are contractors of Indian outsourcing companies. So basically more than 85%+.”
~Marketplace comment by Van Le, 12/3/09
In a global economy, the cost of production is critical. But we have established a culture that excels in a Darwinian reduction that is structurally encouraged by federal tax policies. Let’s start with a simple assumption: Governments can use carrots and sticks to promote any set of policies they choose. Denmark is aggressively green and doesn’t like cars. The value-added tax on a car there is 180% of the cost of the car. So a $20,000 car triggers a $36,000 VAT tax. That’s how heavy the hand of government can get in protecting its interests.
Take offshoring then. The federal government could offer an employment tax reduction for every new job created in the U.S.—while at the same time levying a value-added tax to goods and services produced by American companies with offshore labor. This would help to protect its interests of minimizing the actual costs of unemployment compensation and services for displaced workers.
Jobs are a resource, a national resource. They provide the essential glue that holds the whole enchilada together. But, by everything I can see, we don’t care. With 8 million out of work, ours is a Darwinian fantasy. We have been removing deck chairs on this cruise liner, and when it leaves port again, millions will find they have no place to be.
Boomers Race the Clock
The baby boomers are such a humungous bulge they create their own weather. And today they face a drought. That super-heated economy that keep so many in marketing, IT, and management positions won’t be back for years—and time is precious to boomers. You hear that 60 is the new 40. Perhaps that is most true with regard to their ability to retire. Having been knocked off the assembly line in the midst of a spending spree, some may need to think about working for another 20 years in deadend jobs. We can’t go back to where we were because it is not there anymore.
For man who lost a $100,000 job in 2008 at the age of 54, it might be another three years before he is pulling down $80,000 again, if ever. The outplacement industry blithely encourages its captive audience to use social networking, repackaging, and reinvention to survive. I can’t see how that is fair when the applicant-to-placement ration remains at 80 to 1, no matter how much Botox you use.
The Workforce Infrastructure as a Resource
Reich implies that the workforce is an infrastructure. Why not? The original stimulus package failed at physical infrastructure up to this point, and prospects are wait-and-see going forward. Maybe a little redefinition is in order. I heard that President Obama demanded that a surge in Afghanistan start immediately if not sooner. Well, let’s offer small business tax credits for jobs created in the next six months. That ought to get some businesses off the fence.
According to Bloomberg News, total U.S. bank lending has declined by 6.4 percent since November 2008. Let’s use TARP reserves to offer banks a 20 percent payback discount for every dollar they loan to small business expansion efforts in the next six months. Call it a surge. If the banks stall, tell them it’s TARP audit time. And if the law calls for unused TARP funds to repay the deficit, explain that getting the economy humming with new workers who pay taxes as employees of businesses that pay taxes is what will pay down the deficit. If TARP-assisted banks won’t lend to small businesses threaten them with more regulation. Banks who used TARP funds to shore up their balance sheets to pay back the government so they could go back to bonusland can be told they will have to revalue the toxic assets they still carry on their books at present value unless they agree to lend to fund expanded payrolls. If we can tell insurance companies that 90 percent of revenue must go to fund claims, as has been proposed, we can certainly play hardball with the banks.
The difficult truth is, it doesn’t matter if the federal government’s No. 1 job becomes jobs because it is relatively powerless to create very many. What we need is the fastest possible recovery without devolving into runaway inflation. That means we have to stimulate investment, demand, and an improved psychological outlook so people with money begin to part with it again. The two best ways to do that are through a tax holiday and freer lending to small businesses. I find it unbelievable that we can commit another $400 million to Afghanistan but we can’t do this.
Give the administration some credit for avoiding catastrophe and putting the breaks on the freefall. The jobless numbers for November were so good they read like a typo. Now we need to see 100,000 new jobs a month by January and 250,000 new jobs a month by June. And I am not talking about government jobs, I am talking about jobs that create mercantile or commercial value, so IT professionals, and marketers, and managers can run with it.
If jobs are a resource, we need to communicate with American business to get this across. As tempting as one might find it to just smack ‘em donkey-style with a two by four, incentives are probably a good way to go. But taxes that support responsible policies are also good. Through a differential on corporate income taxes, the government could reward job creation. At the end of 2010, any Fortune 1000 company that is showing a fat, say 25% year over year profit based on a 2009 headcount—surtax! Corporate bean counters should be astute enough to figure out by mid-year if they need to do some hiring to avoid a surtax. After all, if Denmark can send a nasty message about cars, why can’t we send a constructive message about jobs?
By the way, the idea of a Depression-style Works Progress Administration jobs initiative is a nonstarter. This is not a depression, times have changed, work camps are so 1930s, and we don’t need starter jobs. We need good jobs—jobs that will sustain a mortgage
If we do little to stimulate job growth in the private sector now, we will be facing a world of hurt, from the electorate, and from an agonizingly slow recovery. Nothing retards growth like the absence of demand that eight million whacked or underemployed workers represents. But the fact remains that you can’t just throw money at jobs; stimulation has to be systemic. Even more, strategic. And President Obama’s plan is lacking in that department. So, he needs to direct his Wall Street dream team to get their hands dirty and figure out how to inspire, cajole, corral, and even whip the nation’s businesses into hiring some workers. Teach them to make their own luck, because that’s what a recovery pretty much comes down to. Oh, and they should give Robert Reich a call.
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(Robert Reich is a professor of public policy at the University of California, Berkeley. He is a regular Salon contributor. He served as Secretary of Labor in the Clinton administration.)