Obama jobs plan: big ideas, but a big hole to fill in hiring
Obama’s jobs plan is an ambitious attempt to spur a pace of hiring that’s far below normal. Small-business tax breaks, infrastructure spending, and energy efficiency are key areas.
President Obama proposed a new set of job-creation proposals Tuesday designed to confront a stark problem: Even though the rate of job cuts in the economy has eased, the pace of hiring remains far below normal.Skip to next paragraph
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That issue – how to spur hiring – is the central one for policymakers considering how to bring down America’s unemployment rate in the next year.
Mr. Obama said his proposals have the best chance to succeed, delivering the “greatest number of jobs [at] the greatest value for our economy.”
His proposals came in three broad areas:
• Small business. A new temporary tax credit would go to businesses that add workers to their payrolls. Other tax breaks would encourage business investment, such as a one-year capital-gains tax rate of zero for new investments in small firms. Obama also called for continuing programs already under way to support small-business lending.
• Infrastructure. The president called for more spending on transportation and water projects in the next year, expanding the existing stimulus spending in this area by perhaps $50 billion.
• Clean energy. He proposed rebates for families to retrofit their houses to be more energy efficient. Modeled on the “cash for clunkers” scheme that boosted auto sales this year, the program has been dubbed “cash for caulkers.”
The key ideas will require congressional approval, so many of the details and dollar figures must still be negotiated in coming weeks.
Obama’s proposals come as the job market has stabilized somewhat, but with employers still reluctant to hire.
The job market includes lots of monthly turbulence, as several million workers are hired, fired, or leave their jobs. The key is how it all nets out: Are employers adding more workers than they are letting go?
Rate of hiring far below normal
What’s happened during this recession is that the rate of hiring has fallen far below the normal, and well below the level seen during and after the 2001 recession. Today, employers are hiring just three workers each month for every 100 jobs in the economy. More typical would be a 4 percent hiring rate, judging by Labor Department records on job turnover that go back only 10 years.
“Even though we have reduced the deluge of job losses to a relative trickle, we are not yet creating jobs at a pace to help all those families who have been swept up in the flood,” Obama said in his speech, given at the Brookings Institution in Washington. “There are more than 7 million fewer Americans with jobs today than when this recession began.”
That leaves what Obama called a big “hole” to fill, even though economists say the initial Obama stimulus program, the $787 billion American Recovery and Reinvestment Act, may have saved or created about 1 million jobs this year.