2012 photo of Los Angeles site seeking workers.

Damian Dovarganes, Associated Press

U.S. job growth: A five-point plan

  • Article by: Tom Horner, Tim Penny
  • September 7, 2013 - 5:37 PM

Last weekend’s Labor Day holiday left too many American workers with little to celebrate. Job growth is anemic, and not nearly enough to return the economy to full employment anytime soon.

Harvard economist Ken Rogoff argues that the slow job recovery was a predictable outcome of a recession rooted in the collapse of financial institutions. His theory is that we are experiencing a reset of an economy that for too long was built on debt.

Recovery from this kind of recession will take longer than the turnaround time needed to emerge from other downturns. Accelerating a dismal 2 percent annual rate of economic growth as we recover from the Great Recession will require a long-term perspective.

Unfortunately, today’s policymakers are offering only short-term stimulus and simplistic rhetoric, all of it designed for immediate political benefit. Better, smarter public policy is needed in five areas to create well-paying career jobs that will put the unemployed and underemployed back to work.

First, government isn’t the economy, and it doesn’t create markets. As the New York Times and others have pointed out, taxpayers spend billions to subsidize businesses but receive little in long-term economic benefits.

The same holds true when short-term jobs are subsidized as “economic stimulus.” According to the Congressional Budget Office, every job created by the recession-recovery stimulus program cost American taxpayers between $500,000 and $4 million.

Thoughtful policy would have government saying “no” to most businesses seeking public handouts. Instead, redirect the money to rebuilding the country’s roads, ports and other infrastructure. Those investments create good construction jobs today and build the foundation for future economic expansion.

Second, we need policies that are both pro-trade and pro-immigration, not the either-or approach of Democrats and Republicans. American markets already are wide open to imports. New trade agreements — including the pacts President Obama has sought with Republican support — will increase American exports and create jobs in this country.

Immigration reform shouldn’t just be about border security and undocumented aliens. Even though only a third as many visas are issued today as before 9/11, fully 68 percent of our nation’s doctoral graduates are born elsewhere. Instead of staying here and creating businesses as they once did, most now return home after their studies. Immigration reform should make it easier for bright and ambitious foreigners to build this country’s economy.

Third, sensible tax policy is also essential to economic growth. The bipartisan tax reforms in 1987 — fashioned by a Democratic Congress and signed into law by Republican President Ronald Reagan — are a good model for today. Those reforms simplified the tax code and lowered rates and were a catalyst for the economic growth in the 1990s.

Fourth, energy policy must move beyond the tired left-right battles of green vs. all-out production. We need an “all of the above” energy strategy that encourages conservation and efficiency, responsibly tapping our own energy reserves and developing renewable alternatives to fossil fuels. Our economy will be stronger if we become more energy independent. Meanwhile, emerging technologies will create new sources of energy and new industries.

Finally — and this is a task more for states than Washington — we need to reduce a school dropout rate that now reaches 50 percent in some cities. This will require spending more for quality early childhood education, and holding teachers and students to high expectations (that means that ineffective teachers aren’t automatically rehired solely because of seniority and students aren’t promoted to the next grade only on the basis of the calendar). This effort must include investments in everything from more technical and trades training in high school to more-affordable postsecondary options.

Public policies aren’t the only answer, of course. Leaders in the private sector have been overly cautious and too reluctant to contribute constructively to the debate. A recent study found that median household income is 6 percent lower than it was at the start of the recession in 2007. This growing wealth disparity can most effectively be reduced through stronger economic growth that reaches and benefits all American workers.

The bottom line, though, is that policymakers have misdiagnosed the current economic downturn, seeking short-term answers when long-term, fundamental reform is needed. At this crucial time, facing a reset second only to that experienced in the 1930s, we need better leadership than we are getting.


Tom Horner is a public-affairs consultant and was chief of staff to former U.S. Sen. Dave Durenberger, R-Minn. Tim ­Penny is president and CEO of the Southern Minnesota Initiative Foundation and is a former Democratic member of Congress. Both are former Independence Party candidates for governor.

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