In the 2012 election cycle, "Job No. 1" for any political candidate will be to lay out persuasive plans for generating more middle-income jobs.
In the more than two years since the Great Recession ended, job growth has been exceptionally slow. Today, 14 million U.S. workers cannot find jobs and the unemployment rate hovers at 9.1 percent. That's nearly twice the level that would reflect a healthy labor market.
During a rare joint session of the House and Senate on Thursday, President Obama presented his latest plan for spurring job growth. Candidates for the Republican presidential nomination also have offered plans, as have business groups and labor organizations.
No one plan is likely to work overnight magic. The problem is simply too big to be fixed quickly. To cut the unemployment rate to 5 percent within five years, economists estimate employers would have to generate nearly 300,000 jobs a month. In fact, since early 2010, the economy has been adding only about 100,000 jobs a month on average.
Now even that feeble pace has stalled. The Labor Department says that in August, the net number of new jobs fell to zero.
The reasons for this lack of job growth are myriad and predate the most recent recession. When economists explain why the 21st century has so far failed to generate large numbers of high-paying jobs, the factors they mention include (in no particular order):
- lack of consumer demand stemming from job insecurity, mortgage troubles, slow wage growth and shrinking savings;
- new technologies that reduce the need for labor;
- cheap foreign competition;
- discouraging tax policies;
- a mismatch of job openings and skills;
- burdensome health care costs;
- a lack of spending on infrastructure;
- either too many or too few free trade agreements;
- inappropriate regulations;
- too many or too few immigrants; and
- an aging workforce.
The White House hopes its plan will get the job-creation machinery moving again. Two candidates for the GOP presidential nomination, Mitt Romney and Jon Huntsman, also have released job plans. The U.S. Chamber of Commerce and the AFL-CIO each have plans too.
The solutions vary widely.
On Thursday, President Obama called on Congress to pass an unexpectedly large legislative package called the American Jobs Act. More than half of the $447 billion plan would consist of payroll tax cuts for workers and employers. It would provide additional tax breaks for employers who hire new workers or increase wages.
The plan also calls for spending $140 billion on infrastructure and aid to state and local governments. It includes cash for hiring teachers and refurbishing schools, and $50 billion for transportation projects. To help people who are seeking work, it would provide more than $62 billion to extend expiring unemployment benefits through next year, and to fund other programs aimed at reducing long-term joblessness.
It would push regulators and lenders to allow more homeowners to refinance their mortgages at current low interest rates, a move that would reduce monthly costs and possibly prevent many foreclosures.
Obama said the cost of the jobs package would be offset with spending cuts and tax revenue increases over the coming decade. He plans to announce the offsets on Sept. 19.
Mitt Romney, a candidate for the GOP presidential nomination, has released his "Day One, Job One" plan, which promotes five major legislative proposals for his first 30 days in office.
Those "five bills for Day One" include:
- reducing the corporate income tax rate from 35 percent to 25 percent;
- implementing free trade agreements with Colombia, Panama and South Korea;
- expanding domestic energy exploration;
- consolidating federal job training programs and sending the funding and responsibility to states; and
- cutting nondefense discretionary spending by 5 percent.
Romney also said he would repeal President Obama's health care plan; eliminate Dodd-Frank and cut business regulations; sanction China for "unfair" trade practices; and undo pro-labor executive orders signed by Obama.
Jon Huntsman, a candidate for the GOP presidential nomination, is promoting his "Time to Compete" plan.
He proposes eliminating deductions and credits, while creating three lower individual brackets, set at 8 percent, 14 percent and 23 percent. He also would lower the corporate rate from 35 percent to 25 percent and offer a tax "holiday" for repatriating corporate profits earned overseas. He would eliminate taxes on capital gains and dividends, and wipe out the alternative minimum tax.
Huntsman calls for the repeal of the Dodd-Frank Act, which imposed new regulations on Wall Street, and wants to undo President Obama's health care plan. Huntsman's job plan calls for increased domestic energy production and more free trade agreements.
In an open letter to Congress and the White House, the U.S. Chamber of Commerce offered its own plan for expanding jobs.
The business organization said its goal is to add 6 million jobs by 2013. To do that , it offered six steps:
1) reducing tax rates to corporations on profits earned overseas and temporarily reducing the tax rate paid on the sale of capital assets;
2) implementing free trade agreements with Colombia, South Korea, and Panama while modernizing export control measures;
3) increasing domestic energy exploration;
4) increasing spending on road, bridge and airport construction, using fuel taxes or other user fees;
5) boosting tourism by streamlining visa applications and speeding up security screenings for low-risk travelers; and 6) cutting regulations.
The AFL-CIO, an umbrella labor organization, is offering a six-point plan for generating jobs. The focus is on boosting government spending to directly create jobs.
The labor group says government should:
1) spend at least $2.2 trillion to repair 20th century infrastructure, and another $2 trillion to build a "clean" energy infrastructure;
2) crack down on currency manipulation by foreign countries and kill proposed free trade pacts with Colombia, Panama and South Korea;
3) create millions of "local community" jobs;
4) help state and local governments avoid layoffs by funding public service jobs;
5) extend unemployment benefits and provide more help for struggling homeowners; and
6) reform Wall Street to discourage speculation.