Results 1 to 8 of 8

Thread: How exactly can government promote a climate conducive to job creation?

  1. #1
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default How exactly can government promote a climate conducive to job creation?

    Texas Governor Rick Perry's parachute drop into the race for the GOP Presidential nomination has been accompanied thus far by a laser-beam focus on his (or at least his state's) record of job creation. Perhaps in response, Michelle Bachman is doing the same. And President Obama has dusted the topic off and trotted it out again.

    I'm interested to know exactly what different politicians propose to do to create jobs. And as an aside, I'd like to know more about the nature of the jobs created in Texas (I forget the exact figure, but seem to recall something like 40% of all new jobs created over the past few years were created there).

    The Keynesian approach (which I favor) is fairly obvious and straightforward--have the government spend money directly on municipal positions such as teachers, police officers, and fire fighters, or spend money indirectly on private sector positions such as engineers and construction workers by funding infrastructure projects. Rightly or wrongly, today's political climate seems to preclude this approach.

    When those on the right talk about creating jobs (by which they invariably mean having the private sector create jobs), how exactly do they propose that government assist
    (even if only by getting out of the way)? I hear platitudes about reducing unnecessary regulation (such as pesky clean air laws) and cutting taxes (when taxes in the US are already at a worldwide low among developed nations). But is there evidence that either of these really works? And are there other avenues?

    My (admittedly novice) read of the economy is that companies have more than enough cash on hand to hire. They don't, however, as they fail to see the demand for products and services that would warrant such hiring. This demand doesn't exist because too many people don't have jobs at all or are underemployed (and those fully employed carry too much debt).

    Besides government spending (even deficit spending in the short term), are there documented concrete steps that the government can take to encourage private sector firms to hire?

  2. #2
    Join Date
    Mar 2011
    Posts
    215

    Default

    An interesting perspective: http://blog.irvingwb.com/blog/2011/0...as-future.html

    I particularly liked the Drucker quote: "‘The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic."

  3. #3
    Join Date
    Apr 2011
    Posts
    27

    Default

    Hi Everybody,

    Hopefully everybody is safe after the hurricane.

    A huge tree near our house fell onto Route 20 and that is main cause the power outage.

    Regarding Rick Perry, this was one of the unbiased articles about his record as Texas Governor - http://www.nytimes.com/2011/08/22/op...q=perry&st=cse.

    Regarding regulations and job creation, nobody is just talking about repealing clean air laws, etc. There are a lot of regulations that can be removed. These are some of the good articles about regulations and the damage wrought by them:

    http://online.wsj.com/article/SB1000...EYWORDS=oregon


    http://online.wsj.com/article/SB1000...EYWORDS=oregon


    http://online.wsj.com/article/SB1000...DS=boeing+nlrb

    - Nick

  4. #4
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    With all due respect, Nick, I'm not quite sure that the Wall Street Journal is exactly the place I'd turn for unbiased thoughts on businesses and regulations! [grin]

    In looking through those opinion pieces (not "articles"), I came across mention of a 54-page Business Roundtable document that apparently lists regulations hindering job creation. I hunted around on the BRT web site, but couldn't find a PDF file matching the document's description (if anyone can find it, please post it in this thread). I did, however, find this page, which may be an HTML version of the document.

    I hope that it's inarguable that at least some regulation is necessary. And I have no doubt that there are examples of regulations that simply don't make any sense. But overall, my sense is that we're under-regulated, not over-regulated. Agencies such as the FDA are notoriously understaffed, a fact we experience the hard way every time there's an e. coli or salmonella outbreak.

    I'd be interested to learn of any relatively objective sources making the case that over-regulation is a bigger barrier to job creation than lack of demand.

  5. #5
    Join Date
    Mar 2011
    Posts
    215

    Default

    July 2011 unemployment rates from the Dept. of Labor's Bureau of Labor Statistics report Employment status of the civilian population 25 years and over by educational attainment:

    • Less than a high school diploma: 15%
    • High school graduates, no college: 9.3%
    • Some college or associate degree: 8.3%
    • Bachelor's degree and higher: 4.3%

    Only 35% of the labor force has a Bachelor's degree or higher.

  6. #6
    Join Date
    Nov 2005
    Location
    Wayland MA
    Posts
    1,431

    Default

    This data raises at least one interesting question: to what extent is the unemployment problem the result of (a) people being under-educated versus (b) the lack of jobs that don't require a college education. Not sure if the Bureau of Labor Statistics is the place to look, but I'd like to see what job availability (that is, unemployment rate) by job type looks like over time.

    For instance, if we look at municipal workers, unemployment includes teachers (who generally have a college degree) and public safety employees (who may be less likely to have a college degree). In the private sector, jobs in construction may have taken a particularly hard hit, and these two may be positions with a lower percentage of people holding college degrees.

    Looking at a college education from another perspective, are the content and skills being taught the right ones for current and future employment?

  7. #7
    Join Date
    Mar 2011
    Posts
    215

    Default

    Quote Originally Posted by Jeff Dieffenbach View Post
    This data raises at least one interesting question: to what extent is the unemployment problem the result of (a) people being under-educated versus (b) the lack of jobs that don't require a college education. Not sure if the Bureau of Labor Statistics is the place to look, but I'd like to see what job availability (that is, unemployment rate) by job type looks like over time.
    I could not find backward-looking data on the BLS site, but there's an interesting set of projections for 2008-2018 here.

  8. #8
    Join Date
    Mar 2011
    Posts
    215

    Default

    In his post Back to (the wrong) school, Seth Godin references a relevant paper entitled The Evolving Structure of the American Economy and the Employment Challenge. From the abstract:

    "This paper examines the evolving structure of the American economy, specifically, the trends in employment, value added, and value added per employee from 1990 to 2008. Employing historical time series data from the Bureau of Labor Statistics and the Bureau of Economic Analysis, U.S. industries are separated into internationally tradable and nontradable components, allowing for employment and value-added trends at both the industry and the aggregate level to be examined." (emphasis added)

    Here's the 12-point executive summary:

    1. Employment growth in the U.S. economy between 1990 and 2008 was substantial, on the order of 27.3 million jobs, off a base in 1990 of 121.9 million.
    2. Virtually all (97.7 percent) of the incremental employment stems from the nontradable sector. This occurred despite dramatic labor-saving technology in information processing that ran across all sectors of the economy.
    3. The leading employment sectors are government and health care, in that order, both on the nontradable side. Together these two sectors generated more than 10 million additional jobs over the period, accounting for almost 40 percent of the increment. Health care added 6.3 million jobs on a base of 10 million. Government added 4.1 million on a base of 18.4 million.
    4. Given the pressure on the government budgets, continued gains in government employment seem unlikely. Equally, health care absorbs a large enough fraction of GDP (on the order of 16 percent) that expansion in that sector is at least questionable. An aging population may require more health services, but the government’s ability to finance the expansion is in doubt.
    5. Growth in other nontradable services that generated employment gains—for example, retailing—has been driven in part by debt-financed consumption. After the financial crisis, the prospects for job growth in these sectors are duller.
    6. The tradable sector experienced job growth in high-end services including management and consulting services, computer systems design, finance, and insurance. These increases were roughly matched by declines in employment in most areas of manufacturing.
    7. The loss of employment in the manufacturing sector was caused by the out-migration of functions in global supply chains associated with lower valued added per job. But as the emerging markets grow, they will compete for more sophisticated functions. This does not mean that the United States will lose all the sectors in which it has developed a comparative advantage—just that more potential competition is on the horizon.
    8. Manufacturing sectors that suffered a loss of employment nevertheless experienced rising value added. Therefore value added per job rose, in some cases dramatically. High-income jobs remained in the tradable sector.
    9. For the tradable sector as a whole, value added per job rose substantially, an increase of 44 percent from 1990 to 2008, far above the increase of 21 percent in the economy as a whole. The tradable sector is gravitating toward higher value-added components of global supply chains. These consist, in broad terms, of high-end services, some in manufacturing industries and some, like finance and insurance, in pure service industries.
    10. Given the prospect of slowing employment growth in nontradables and rising competitive pressure on tradables, major employment problems in the near future are a certainty. Even if the nontradable sector is able to continue to absorb the growth in the labor force, pressure on wages and salaries will be downward, and consequences for income distribution unavoidable.
    11. The postcrisis shortfall in domestic demand is causing stubbornly high unemployment even as the economy begins to recover some of its growth momentum. In principle, foreign demand, especially from the high-growth emerging economies could make up some of the difference. But it probably will not happen. Although the U.S. trade deficit fell to $375 billion in 2009, from $702 billion in 2007, the adjustment came entirely from a sharp decline in imports, from $2.35 trillion to $1.95 trillion, whereas exports actually fell slightly, from $1.65 trillion to $1.57 trillion. In other words, the adjustment came from a fall in imports not a rise in exports.
    12. To create jobs, contain inequality, and reduce the U.S. current-account deficit, the scope of the export sector will need to expand. That will mean restoring and creating U.S. competitiveness in an expanded set of activities via heightened investment in human capital, technology, and hard and soft infrastructure. The challenge is how to do it most effectively.


    So tradable functions with lower value added per job are being outsourced, and tradable functions not outsourced are experiencing increases in value added per job - but are under increasing outsourcing threat from emerging markets. While automation certainly plays a role, increasing a job's value added likely increases the educational requirements for that job.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •