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Creating the Jobs America Needs

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While financial markets believe the great recession is over, millions of Americans continue to struggle. Unemployment is 10.2 percent and the more inclusive measure, underemployment, is at 17.5 percent. America's jobs crisis is both a short-term and long-term challenge

A combination of circumstances brought us to this point. There's been a long-term decline in manufacturing jobs, which were replaced by employment in service industries: fathers who worked on Detroit's assembly lines making buses saw their jobs disappear and their sons and daughters employed driving buses. The US shifted from producing goods to providing services.

At the same time, we became more consumption oriented and less inclined to save. There was a fundamental shift in our values: Americans increasingly took a short-term perspective, went into debt to finance their lifestyle, and placed primacy on self-interest rather than the common good.

As the result of these trends and the meltdown in the financial services industry, by January 2009 the US economy was in terrible trouble. Many Americans were underemployed and deeply in debt. Furthermore, the US had lost its position as the world's preeminent economy; our competitiveness had been weakened by severe structural problems: healthcare costs, decaying infrastructure, energy costs, and an aging and under-educated workforce.

Therefore, the Obama Administration faces both a tactical problem and a strategic challenge. Citizens need to have jobs as soon as possible but a sustainable recovery requires restructuring of the economy.

Severalshort-term actionshave been proposed to reduce unemployment. One category requires further expenditure of Federal funds. The initial stimulus package saved the jobs of millions of government workers - teachers, healthcare professionals, and first responders - by providing assistance to states and communities. As these entities continue to struggle, the scope of that rescue might be expanded. Furthermore, the first stimulus package provided $80.9 billion for infrastructure; creating a new infrastructure bank to finance big construction projects or expanding efforts to weatherize public buildings and homes could strengthen this effort. In addition, there could be New-Deal-style employment programs such as the WPA and the CCC. Given our jobs crisis, America might adopt the tactic that the Federal government is our employer of last resort.

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Another type of solution requires revised Federal policies or tax laws. Economist Paul Krugman suggested the US should adopt policies that support private-sector employment: "labor rules that discourage firing to financial incentives for companies that either add workers or reduce hours to avoid layoffs."The Economic Policy Institute proposed a new jobs tax credit "of 15% of expanded payroll costs in 2010 and 10% in 2011" that would create five million jobs. Economist Robert Reich argued that since big banks are not lending to small businesses, the US should "expand the Small Business Administration's lending programs and have the Fed buy up the SBA's debt." There's been bipartisan support for a payroll-tax holiday, as more than 80 percent of American pay more in taxes for Social Security and Medicare than they do in income taxes. Pending congressional legislation requires "small-business owners to invest the savings from the payroll tax holiday in hiring new workers or buying machinery or other investments to make their firms more productive."

Whether they involve increased federal funding or policy changes, these proposals are tactical; they treat all jobs as equal. However, creating new jobs at McDonalds is not the same as developing employment at a firm that produces wind turbines. Manufacturing jobs typically pay better than service-sector jobs and, in the case of green jobs, have important social consequences.

What's needed is along-term economic strategyto insure that America becomes more competitive in the global marketplace and, at the same time, generates high-quality jobs. Some pundits want the Federal government to pick winners, focus on certain industrial sectors. For example, they suggest Washington increase its investment in green jobs - manufacturing of electric cars - and deemphasize support for service industry jobs.

While there is wide support for government policies favoring green jobs, many progressives believe the US should adopt a more expansive industrial policy to address the structural problems besetting the US economy. The hope is that in the course of addressing problems such as education, energy, healthcare, and infrastructure the American marketplace will be stimulated: new opportunities will arise creating high-quality jobs. Rather than have the Obama Administration pick winners, a more expansive industrial policy would give entrepreneurs the opportunity to develop necessary new products and create meaningful jobs.

Obviously, short-term job-creation actions need to be taken, as well as remedial steps such as heightened regulations on financial markets. But the highest priority for the Obama Administration is to articulate a national industrial policy to stimulate our entrepreneurial spirit, create meaningful jobs, and heighten our global competitiveness.

In 2010, the most important Administration job-creation actions will be those that deal with the structural problems in the economy. The US needs to educate our citizens, provide them with affordable healthcare (and housing), change their energy habits and reduce their dependence upon fossil fuel, and bring America's decaying infrastructure into the 21st century. A new jobs initiative requires a strong foundation.

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Bob Burnett is a Berkeley writer. In a previous life he was one of the executive founders of Cisco Systems.

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