4 smart things Barack Obama said about job creation

All well and good, but until banks start lending to small business again, not enough.
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How do we get the banks to lend? That’s the question…the regulation pendulum has swung so far to the “abundance of caution” side of things, banks are skittish about loaning to anyone. It’s an old joke, but all too true in this environment…bankers are willing to lend all the money a company might want, just so long as the company doesn’t need it.

Barbara, thanks for pointing out that some biz’s are ok. I’d love to rant (again) about cos. needing to hire already, but your job creation bill limits post addressed this. Great pt. on community colleges, although it’s interesting / frustrating that licensed fields from architects to doctors mandate accredited univ. degrees …even though on-the-job training is best.

Randomkirk, re: bank lending, maybe we can ponder carrots and sticks here with Barbara’s help. With sticks, can the Fed force banks to lend or must rules change? Banks must maintain % cash reserves so why not make them lend out a min. % at all times or else (risk default / takeover, lose FDIC coverage, etc.)? Harsh, yes, but these are harsh times.
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re: carrots, maybe we can explore market’s options than just banks – with cautions. As consumers we have credit unions, money mkt. funds, stockbrokers, etc. Companies can access VC and other private money, etc. What other options are out there for us? I remember the ‘80’s S+L scandal as a caution where the TX and CA savings rushed into real estate deals (sound familiar?) and took in huge deposits. From that and the current derivatives mess we’d have to carefully oversee things but still, the more “banking” options we have the better (I hope). I’m done (sorry for post length). What are your thoughts and other possible solutions, Barbara? Thanks.

I’m sorry, Barbara, I am an admitted cynic. Do I detect a certain sarcasam on points 3 & 4? You don’t think that S. Korea, Columbia, & Panama free trade deals won’t increase GDP growth by, oh, GOBS??!!
And community colleges won’t save our economy because, after all, all those high paying jobs out there that are just shriviling because they don’t have properly trained candidates? Well, I guess 2 pionts out of 4 ain’t bad … what glass half full & all.

@timothydillian: No intended sarcasm, though I do agree that trade deals are hardly a cure-all. Some of our largest industries in terms of employment and job growth (e.g., health care services, education) don’t export all that much. Though for the industries that do, these trade deals are definitely important.

As for community colleges, I see your point, but what about the retraining component I mention? What about the ability to help lab technicians, say, migrate from one industry to the next?

What a perfect opportunity to link to this TIME article:

http://www.time.com/time/nation/article/0,8599,1967580,00.html

Come on Barbara, synergy!

This is all pretty much trickle down and bait and switch. You want jobs? Create J-O-B-S, not goodies for corporations.

Here’s how:

Economists Push for Federal Job-Sharing Program

Proposal Would Prevent Layoffs by Helping Employers Reduce Worker Hours

By Mike Lillis 2/24/10 6:24 PM

As job creation continues to be the caboose of economic recovery, employment experts of all stripes are hiking the pressure on Congress to tackle the crisis by encouraging employers to cut hours rather than firing workers. And more and more lawmakers are taking heed.

Seventeen states have already adopted so-called ‘job-sharing’ programs, which encourage employers to reduce workers’ hours in lieu of firing them outright. The state government, in these cases, then steps in to make up a portion of the lost wages. Between 300,000 and 350,000 workers are participating nationwide, saving roughly 100,000 jobs that would have otherwise been scrapped, according to Dean Baker, co-director of the liberal Center for Economic and Policy Research and a long-time supporter of the concept.

Yet that’s just a drop in the bucket relative to the 12-million-job crater the country is in, leading many economists — not all of them liberal — to push Congress for a much larger federal investment in job-sharing programs.

Kevin A. Hassett, director of economic policy studies at the conservative American Enterprise Institute, told lawmakers this week that such programs are among the most targeted and cost-effective ways to tackle the nation’s jobs crisis, which has left nearly one in five workers without a job or underemployed.

The concept is simple: Rather than laying off a few workers during lean times, businesses instead could spread the pain by reducing work hours for many. In Hassett’s example, if five workers had their hours cut by 20 percent it would prevent one worker from being fired at no cost to the company. And if Congress were to alter its policies surrounding emergency unemployment insurance, those workers could then access a portion of those benefits — in this case, 20 percent.

Workers benefit by keeping their jobs. Employers win because they don’t have to train new part-time workers. And states would gain because their share of the partial benefits would be less than they would otherwise have to pay.

“Right now the government only really shares in supporting that worker if you lay the whole worker off,” Hassett said Tuesday before the House Financial Services Committee, advocating a policy that isn’t supported by the Republicans who invited him to testify. “By adopting job sharing, we could give firms an incentive to slow job destruction.”

The call is timely. Even as the nation’s unemployment rate fell to 9.7 percent last month, the number of long-term unemployed — those without work longer than 27 weeks — jumped to a historic high. Economists are projecting not only that unemployment will rise later this year, but also that it will remain above 8 percent even two years from now — higher than the peak jobless rate in either of the last two recessions.

Hassett pointed out that the job numbers coming out of the Labor Department each month are net figures reflecting the difference between the millions of jobs created and the millions of jobs lost — a constant churning that he says represents a vital opportunity for lawmakers interested in reducing unemployment.

“There is already a massive amount of job creation out there,” he testified. “If we can slow job destruction even a little bit, then we will have set the stage for big increases in net job creation.”

Reducing involuntary job losses by 10 percent, Hassett estimates, would be the equivalent of adding 200,000 jobs a month to the economy. Job-sharing policies in Germany have kept unemployment rates steady, Hassett said, even while that country’s GDP has tanked almost as drastically as that of the United States. And an additional perk: job sharing would be particularly beneficial to black workers, Hassett said, for the simple reason that blacks are often the first folks to be laid off in tough economic times.

Congress is paying attention. Financial Services Chairman Barney Frank (D-Mass.) called Hassett’s proposal “very useful.” Rep. Maxine Waters (D-Calif.) offered to give him an extra five minutes to testify. And Rep. Mel Watt (D-N.C.) called job sharing “a wonderful idea.”

“I turned to my staff and said, ‘Go draw me a bill that will do this kind of sharing, if nobody else has introduced that bill,’” Watt said.

Turns out, the legislation is already out there. Bills sponsored by Rep. Rosa DeLauro (D-Conn.) and Sen. Jack Reed (D-R.I.) would provide more money to the 17 states already operating job-sharing programs, while offering additional funds to other states that choose to adopt similar initiatives. The White House, Baker said in a phone interview Wednesday, is supportive, though officials there seem intent to let Congress design its own jobs legislation.

Not everyone, though, is on board. Republicans, claiming that the first stimulus hasn’t done anything to help the economy, are near-united in opposition to another large spending bill — regardless of what it contains.

“I’m really surprised that we’re even debating the need for a new stimulus in light of our experience with the old stimulus,” said Rep. Spencer Bachus (Ala.), senior Republican on the Financial Services panel…

What I see in this proposal is the creation of a permanent class of under-employed. To finesse the job market by rewarding what amounts to part-time jobs isn’t the answer. We already have millions of under-employed and unemployed people in this country who aren’t even counted in job statistics…commissioned salespeople, small business owners (or former owners now in the job market), etc. Like it or not, the engine that really drives this economy is credit. Without readily available credit people stop buying, businesses stop expanding, and banks under strict regulation look to other avenues for investment opportunities…”safe” government bonds, corporate paper, etc.

“Like it or not, the engine that really drives this economy is credit.”

Like it or not, “credit” is a euphemism for debt. And, like it or not, when you subtract out all the debt-fueled waste from “economic growth” you’ll find that people would be better off with more leisure and less turbo-charged stuff.

Well, I don’t like it. We should Borrow. Spend. Work. Waste. Want. just so we can Borrow. Spend. Work. Waste. Want. even more!

After all, we’re talking about government programs to stimulate something or other. Aristotle said, “we work in order to have leisure” Capitalism, according to Max Weber turned things on their head: “one does not work to live; one lives to work.”

“Under”employed is a relative term. Many of today’s under-employed are that way because others are over-employed. The unemployed are under-employed by definition.

Tax credits for investment and R&D may indeed create some jobs. But they do so by FIRST putting more on the plates of the already well off. This is called trickle-down. It’s been the dominant principle of policy for 30 years. It intensifies under-employment by subsidizing over-employment.

Maybe the term “tax credit” needs some clarification. It is otherwise known as a tax expenditure. If I own a business that receives a tax credit, I get to spend money on behalf of the government, doing something the government wants me to do.

O.K., fine, the first question I have to ask is “what’s in it for me?” There’s no incentive in a tax credit if I simply spend the whole amount on wages and benefits for new hires. The incentive comes from either getting to keep part of the tax credit (say in off-setting overhead costs that I would have anyway) or to keep additional revenues generated from the tax credit. The point is, the tax credit works only if it makes me richer. Making the rich richer is a prerequisite for creating jobs through investment tax credits. It’s not an unanticipated side effect.

randomkirk: We already have a permanent class of underemployed.

I’m sorry, Barbara. I really wasn’t trying to question your sincerity, rather Mr. Obama’s “looks nice in a jar” retoric. We have trade deficits of tens of billions & we have an offered solution of a couple hundreds of millions. This is a couple of order of magnitudes of difference. So we need bigger solutions or multiples of smaller solutions.
Community colleges are another example. Over crowded, under funded, oft praised & largely ignored institutions, we truly are expecting to much from them. Consider, they have to provide remedial teaching to save the underqualified but graduated high school student, train the poor in some trade, entertain the bored retirees, compete with the state’s universtiy systems for funds, & now we want them to be nimble trainers of the recently unemployed in fields that barely exist. Our political system is setting the community college system up for failure.

It gets sillier.
We the workers are also the labor cost that needs trimming or at least control so we have almost no chance of getting rich,
** We are the customers who are always right (& will be punished for our arrogance according to Dilbert’s Scott Adams) but apparently, we are also the prey for various corporate schemes to empty our pockets (& they certainly are getting rich).
** We are the families who are trying to keep our own middle class lifestyles in balance & give our children a good start even though those costs, in aggregate, far & away outstrip our salaries. So, we send our wives / mothers into the work force to make up the difference. They work for less & now are more employable the husbands / fathers. (must control thse costs you know)
** We are the taxpayers in whose name all this government borrowing is done in order to save the economy & continues the wars that save the world (with our children offered up, as well as our treasure), but none of this activity seems to benefit us. Indeed we are simply handed the bill.
** The best part, the bill holders are other foreign nations (not necessarily our friends) who are cycling the dollars we give them for their oil & lead infested toys back into our governmentt. So we’re going to pay them twice, or thrice if you count the interest.
** This is crazy. There has got to be a better way. Damned if I can think of it though (well, besides torches & pitch forks & all that.)

In point of fact, we are not solving crap. We are merely making the numbers a tiny bit less horrific.