The Jobless Economic RecoveryThe New America Foundation organized a symposium on “The Jobs Deficit: The Challenge of Putting America Back to Work.” Our report of the event follows:
The New America Foundation event gathered a large crowd of economic and political analysts, policymakers and public opinion leaders, who considered the following questions: Given that the nation is facing the worse decline in employment numbers since the Great Depression, does our economy need a second stimulus? And if so, what kind of stimulus?
Many speakers favored a second stimulus and argued for investment in infrastructure specifically. Edward G. Rendell, Governor of Pennsylvania, said that stimulus provisions for infrastructure represent only a start of what the economy needs to create jobs, recover and remain competitive. Gov. Rendell called for a massive infrastructure repair initiative, citing the poor condition of U.S. infrastructure systems vis-à-vis those in other countries such as China. Janet Kavinoky from the U.S. Chamber of Commerce in turn stressed that the health of the economy depends on policies supporting long-term investments in infrastructure.
For other speakers, such as Greg Ip, U.S. Economics Editor at The Economist, a call for a second stimulus is premature. He observed that there are clear signs of reviving demand for labor at least in the construction and manufacturing sectors.
Lenny Mendonca, Chairman at McKinsey Global Institute, and Michael Mandel, Chief Economist for BusinessWeek, called for efforts to achieve a human capital upgrade in the U.S. Mendonca said we need innovation in human capital to help all workers to develop new skills for the longer-term.
In addition, Mandel discussed the contributions of innovation to the economy. According to him, the U.S. has achieved significant scientific advances, but has failed to translate that progress into actual economic impact. Mandel highlighted the potential impact of new jobs in innovative industries, and called for making sure new investments also benefit startups.
Another recommendation discussed at the symposium was employment-based tax credits. Rep. Rosa DeLauro (D-CT), argued in favor of such credits along with increased investment in infrastructure. Timothy Bartik, Senior Economist at the W.E. Upjohn Institute for Employment Research, advocated a job creation tax credit that would reward additions to payroll and would be available to all employers.
With regards to concerns about the growing budget deficit, several speakers including Joseph Gagnon, Senior Fellow at the Peterson Institute for International Economics, and Thea Lee, Policy Director at AFL-CIO, argued that it is not something our leaders should be too concerned about at this time. Gagnon stressed that the cost of financing debt is low today.
Jared Bernstein, Chief Economist and Economic Policy Advisor to the Vice President, delivered a final, keynote address on the downturn in the job market. Bernstein agreed that a jobless recovery is not a true economic recovery. Nonetheless, he argued, the stimulus package has saved or created thousands of jobs, and planted the seeds for shared recovery. Bernstein stated to that moving forward requires improvements in policies for health care, energy, education and financial regulation. In addition, Bernstein called the ideas about employer-side tax credits “worthy of consideration.”
[Reported by Cristina Fernandez]