After weeks of focus on the debt limit and credit ratings, President Obama is engaging in a three city tour to return the topic of conversation to creating jobs and enhancing the productivity of American workers. Indeed, a renewed focus on job creation could not be more timely.
In the past year, employment growth averaged 105,000 jobs per month, which is less than the 125,000 additional people who enter the labor force in a typical month. Each month The Hamilton Project calculates the nation’s “job gap,” or the number of jobs the U.S. economy needs to create in order to return to pre-recession employment levels, while also absorbing those who are joining the labor force. As we entered the month of August, the job gap stood at more than 12 million jobs – a daunting figure in light of recent employment gains. For example, if the economy were to add 208,000 jobs per month – the average monthly rate for the best year of job creation in the 2000s – it would take the United States more than 12 years to close the gap and return to pre-recession levels of employment.
There is no magic bullet to the near-term employment crisis, but many potential levers could be pulled to help provide relief. An aggressive new jobs tax credit, for example, could help spur private sector job growth. While a difficult undertaking in today’s fiscal climate, new investments in infrastructure, through an infrastructure bank or more traditional approaches, could create immediate jobs and provide long-run economic benefits. Further, relief to state and local governments could stem continuing losses of teachers and other state employees. Other more targeted proposals could include reform of Social Security Disability Insurance (SSDI) to encourage workers to remain in the labor force, a modernized corporate tax system that promotes domestic activity and investment, and regulatory reform that protects consumers while freeing the private sector from unnecessary burdens. These are just a few of the many policies ideas that warrant deeper exploration as policymakers turn to addressing our high rate of unemployment.