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State of the Union 101: Nine Obama proposals that might create jobs

A trade pact with the EU. Rebuilding roads and bridges. Innovation centers for manufacturing. Obama put forward a lot of proposals in his State of the Union address, but which ones will add the most jobs?

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Immigration reform: This Obama priority isn’t all about jobs, but the White House plan says the goals include reforming the system for legal immigration to attract more “highly skilled entrepreneurs and engineers that will create jobs and grow our economy.” Many economists support this goal, calling it a way to boost entrepreneurship – benefiting native born Americans – without much cost.

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Honing innovation: Because of global competition and the technological changes that allow products to be made by ever-fewer people, factories, by themselves, can no longer supply middle-class jobs. So the president is calling for a “one-time $1 billion investment” to create a network of “manufacturing innovation institutes” to cultivate and spread best practices.

But manufacturing remains an important part of the overall economy, with relatively high wage jobs and the ability to spawn spin-off employment in surrounding communities.

Improving worker skills: Obama pitched ideas for improving US education from preschool to high school, and for giving college students better information to judge how their chosen major will affect their job prospects. These moves, if they work, could help the US stay more competitive with other advanced nations by offering employers a richer talent pool.

Corporate tax reform: Obama has called for lowering corporate tax rates, while eliminating many loopholes, as a way of luring more employers to America. Meanwhile, he’d add an “offshoring tax” – a minimum tax on offshore earnings by US-based firms. Some tax analysts say the offshoring tax could end up encouraging more companies with global operations to become foreign-owned to avoid extra taxation. But there’s bipartisan support for lowering corporate tax rates as a jobs stimulus.

Achieving fiscal discipline: The president pledged to work with Congress for deficit reduction totaling $4 trillion over about a decade, which “economists say we need to stabilize our finances.”

This move, if successful, could help the US remain an attractive nation for investors over the long term. A political challenge is that Democrats want the solution to involve more tax revenue, while Republicans are generally focused on spending cuts. A further challenge is that the $4 trillion is probably just a down payment on additional fiscal reforms that will be needed down the road for the US Treasury to maintain the faith of global investors.

The White House said the president has been budget-conscious in his proposals. They’re designed not to add to deficits.

Obama also proposed a hike in the minimum wage, to $9 an hour. This is not so much a job creation idea as a way of ensuring that low-wage workers can maintain a decent standard of living.

Many employers say it will reduce the likelihood of hiring in an era of lean business operations.


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