There's no easy solution to spurring job growth. But there are viable ways to make it more attractive for companies to invest in jobs for Americans.
We’ll hear plenty of noisy activity out of Capitol Hill this fall: the third brawl in two years over raising the debt ceiling, heated debates over immigration and government spying, nomination hearings on appointments like the Federal Reserve chief, and, of course, arguments over war in Syria.
And the jobs crisis? Forget it. With Washington’s attention deficit disorder, we’re slipping into a new normal of long-term high unemployment without even noticing. Yet the bad news keeps piling up: an unemployment rate that ticks down only because more Americans drop out of the workforce; an OECD warning that long-term joblessness is becoming an entrenched feature of developed nations — even as economic recovery begins to take hold.
There are no easy solutions to the fierce pressure on job growth from globalization and people-replacing technologies. A rising tide that elevates the top 20% of workers is no longer enough to support the creation of jobs downstream. But some policies can make it more attractive for companies to invest in jobs for Americans, including those who have been out of work for years.
President Obama wants a one-time tax — to generate revenue for government-sponsored jobs on programs like infrastructure — on the estimated $1.5 trillion to $2 trillion of foreign earnings companies leave overseas. Needless to say, this tax-to-spend idea was a nonstarter with the GOP. House Republicans want a similar one-time tax, at 5.25%, but want to use the revenue to revamp the corporate tax code to help finance a “territorial system” to permanently reduce the taxes paid on overseas earnings.
So it’s a Groundhog Day gridlock all over again: Republicans think the private sector should create jobs — and high taxes are in the way. The White House thinks government should create jobs — and tax-dodging corporations stand in the way.
Just about everyone agrees that companies are keeping at least part of that $2 trillion overseas to avoid the highest corporate tax rate in the world. And most economists agree that there are U.S. jobs in that thar gold. So why not borrow Nike’s “Just do it” motto with a two-year tax holiday on foreign earnings — but only for earnings used to produce jobs here?
White House allies have dismissed a repatriation holiday as another business-backed tax dodge, and it’s true that permanent corporate tax reform is needed. But President Clinton’s campaign economic adviser, Robert J. Shapiro, chairman of the finance consultancy firm Sonecon, estimates that this temporary measure would generate 750,000 to 1.35 million jobs over two years. Shapiro’s proposal would impose a 5.25% rate, but only if companies expand their domestic workforces and total payrolls by at least 5%. (The tax rate could be lowered further as companies create more jobs.)
Countering critics of a similar 2004 tax holiday who say that the measure only enriched corporate coffers, Shapiro says this program would be directly keyed to job creation as its central mission. “You’ve got this big pot of money out there,” he tells me. “Let’s lower the costs of hiring.”
And here’s Shapiro’s political calculus: Business-backed Republicans would line up behind it, alongside Democrats from high-tech states like California and global corporate centers like New York and New Jersey.
Likewise, President Obama wants to tackle the problem of how to help those who have been unemployed for years — and are now plagued with rusted skills and low morale. But the President suggested he would fall back to his familiar pattern of shaming CEOs — this time to alter their hiring practices. It won’t work.
What will work is helping make these job candidates more attractive. Here again, Shapiro has a good idea, one that former Prime Minister Tony Blair borrowed for the U.K.: grants to community colleges to stay open at night and offer free computer classes. The equipment is there, the classes are there, and the teachers are available.
The ideas are out there. What’s needed is an unwavering sense of urgency.
This story is from the October 07, 2013 issue of Fortune