America's Job No. 1: A better employment rate
A selection of solutions for a better employment rate: From cutting taxes to raising taxes, job sharing to job training.
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The loss of 7.8 million jobs from December 2007 through September 2010 makes this the worst labor downturn since the Great Depression of the 1930s. Back then, the jobless rate surged to 25 percent, then remained above 15 percent for most of the period from 1934 to 1939. Today's downturn is not just steep but also widespread across occupations and industries (with health care a notable exception). It is also global in scope, although the US has a higher jobless rate than Britain (7.8 percent), Germany (6.9 percent), and Canada (8.1 percent).Skip to next paragraph
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Has anything tried so far created jobs?
President Obama's $787 billion Recovery Act, with its spending programs and tax cuts, has been the biggest effort. Smaller examples include tax rebates in 2008 under President Bush, programs to help homeowners avoid foreclosure, and tax credits for businesses that hire the unemployed.
The Recovery Act created some jobs directly, through spending that resulted in higher federal employment or new contracts with private firms. But the stimulus programs also aimed to help the job market by pumping money and confidence into the economy.
The Obama administration says the Recovery Act alone may have saved or created 3 million jobs, but that number is impossible to verify. Some critics argue that the impact on jobs has been negligible.
Would new efforts to fill the jobs hole take a different approach?
Yes, probably. On both the political left and right, many policy experts say it's time to put less emphasis on trying to find quick fixes and more on laying better foundations for long-run growth.
Conservatives say efforts vital to growth include limiting the size of government and adjusting taxes to maximize incentives for working and investing.
Liberals share some of that fiscal-reform emphasis, but also focus on investing in "human capital" (education) and infrastructure that supports business activity.
This doesn't mean that shorter-term ideas won't be considered as well. Because the housing-market collapse played a central role in the recession, some economists say more should be done to help borrowers avoid foreclosure – freeing them to spend more. Mr. Obama has tried this, but so far the efforts haven't appreciably stemmed the foreclosure tide.
Specifically, what new policies might be tried?
The main ones talked about in Congress and the business community would:
•Grant a payroll-tax holiday. Firms could skip Social Security and Medicare payroll taxes for a year or more. The idea is based on a conservative principle: If you want more of something – employment, in this case – tax it less. The payroll-tax break would complement the existing Hiring Incentives to Restore Employment Act. Some proponents say the impact would be greatest if the tax is permanently scrapped. Economist Robert Shapiro, with the liberal NDN think tank, says one way to pay for such a move would be a tax on carbon emissions to kick-start a transition from fossil fuels.