President Obama gave an impassioned speech last night, laying out a plan to create jobs. He called it an “urgent time for our country,” adding that, “millions of our neighbors are jobless.”
14 million as of last month, according to the Bureau of Labor Statistics.
The experts I contacted were mixed on what his plan will mean for U.S. workers. I include there comments below.
Obama outlined a jobs plan that included everything from infrastructure investments to tax cuts.
Here’s an overview of the initiatives he wants Congress to pass “right away”:
* First, it provides a tax cut for small businesses, not big corporations, to help them hire and expand now, and provides an additional tax cut to any business that hires or increases wages.
* Second, it puts more people back to work, including up to 280,000 teachers laid off by state-budget cuts, first responders and veterans coming back from Iraq and Afghanistan, and construction workers repairing crumbling bridges, roads and more than 35,000 public schools, with projects chosen by need and impact, not earmarks and politics. And, it expands job opportunities for hundreds of thousands of low-income youth and adults through a new Pathways Back to Work Fund that supports summer and year round jobs for youth; innovative new job training programs to connect low-income workers to jobs quickly; and successful programs to encourage employers to bring on disadvantaged workers.
* Third, it helps out-of-work Americans by extending unemployment benefits to help them support their families while looking for work and reforming the system with training programs that build real skills, connect to real jobs and help the long-term unemployed. It bans employers from discriminating against the unemployed when hiring, and provides a new tax credit to employers hiring workers who have been out of a job for over 6 months.
* Fourth, it puts more money in the pockets of working and middle class Americans by cutting in half the payroll tax that comes out of every worker’s paycheck, saving families an average of $1,500 a year’ and taking executive action to remove the barriers that exist in the current federal refinancing program (HARP) to help more Americans refinance their mortgages at historically low rates, save money and stay in their homes.
* Last, the plan won’t add a dime to the deficit and is fully paid for through a balanced deficit reduction plan that includes closing corporate tax loopholes and asking the wealthiest Americans to pay their fair share.
I reached out to business and economic experts, including some from pro labor and pro business camps, to find out whether his plan will actually help boost jobs. I’ll be adding input here throughout the day.
“The President is right: We can put millions of Americans back to work quickly and save jobs by fixing schools and other infrastructure, providing aid to the states, and reauthorizing through 2012 the federal unemployment insurance programs that keep families afloat and keep local economies stable. Rebuilding infrastructure and fixing our school are smart investments that put people to work in the short term and improve quality of life and economic competitiveness in the long term. We applaud these and other elements of the President’s plan, and hope that members of Congress will embrace them and move quickly to enact them.
“We agree with the President that the long-term unemployed need additional assistance in returning to work. Although the President did not highlight it in his speech, we are pleased to note that the American Jobs Act includes a provision to ban discrimination against the unemployed in hiring policies. The President is also right to embrace work-sharing to avert layoffs and preserve jobs. However, while we support increased efforts for the long-term unemployed, we are concerned – and will work to ensure – that the unemployment insurance reforms the President is considering that combine “voluntary” work with unemployment insurance do not undermine the program’s fundamental principles. The Georgia program the President referred to is unproven and just today, the state’s labor commissioner acknowledged it lacks oversight and has yielded uncertain results.
“Finally, the President’s strong defense of the role of government in the lives of all Americans, his support of regulations that protect the workplace and the environment, and his call for big corporations and the richest among us to pay their fair share in order to rebuild the economy were heartening. The ‘jobs’ program outlined earlier by Representative Cantor, which focused exclusively on eliminating regulations and cutting corporate taxes, may send more money to corporate coffers, but it will not put Americans back to work.”
“There is no magic bullet that will get the economy feeling right in short order. It took us years to get into this fix, and it will take some time to get us out. The worse part of the President’s proposal is the illusory funding plan, consisting of unspecified future budget cuts plus loan guarantees. Consumers are nervous about the size of the federal deficit, and this plan will do nothing to reassure them that they don’t have to keep building up their nest eggs in the face of a growing federal budget imbalance.
“There are a couple of things to like in the plan, most prominently eliminating corporate tax preferences in order to lower the corporate income tax rate.
“Job issues: the further extension of unemployment insurance benefits is a dangerous lure to the unemployed. Job search intensity is lower among those receiving unemployment insurance. That’s not a matter of laziness, but human nature tends to postpone unpleasant tasks—and what’s more unpleasant than job hunting? As a result, those who are not receiving UI tend to find jobs faster.
“The tax credit for hiring the long-term unemployed sounds good, but is subject to concerns about businesses gaming the system. If they fire one worker and then hire an unemployed person, does the company get a credit? Figuring out good rules and compliance procedures will either take too long, or will be too haphazard to have a significant effect.”
James Galbraith, an economist and the Lloyd M. Bentsen, Jr. Chair in Government/ Business Relations, Lyndon B. Johnson School of Public Affairs, and Professor, Department of Government, The University of Texas at Austin.
“The proposal highlights the fact that unless Congress acts now things will get substantially worse. A large part of the proposal consists of things that are already in place. Unemployment insurance is a big piece of it and so is a payroll tax holiday. So what’s he’s proposing is not to take those things away. It’s a good thing but won’t change anybodies perception of the economic condition from what it is now. It merely prevents things from getting worse.
“Will that create jobs, not very many. But it might prevent some jobs from being lost. Unemployment is not a jobs program its a relief program. And the payroll tax holiday is not going to bring people back into the stores.
“Infrastructure is a valuable thing, and so it giving money to states for the general purpose of retailing important staff. But the 14 million already out of work are going to stay out of work.
“It didn’t go far enough. The whole problem of what to do with the economy needs to be rethought on a different basis.
“Another problem I have is this notion that down the road you have to offset this short-term program with cuts in Social Security, Medicare and Medicaid. This is a bad trade off, impoverishing millions of people down the road. There is not need to offset something you’re doing in the present by taking it out of the hides of low income, and older people in the future.
“You should do two things. Create jobs corps for the needs we actually have. Stop pretending its all about painting roads. Secondly, we should move as many older workers as you can out of the workforce. Lower the retirement age.”
“Last night’s much anticipated speech by President Obama suggested the best solution for the ailing employment situation is to create work on the nation’s infrastructure and education facilities, and hire additional local first responders. Will this work? Only time will tell.
“However, one thing is clear. Over the past few years, companies large and small have had no choice but to do more with less, thereby increasing productivity and tapping into cost efficiency. Therefore, it can be argued that if a company brought on one or two new employees, they could get twice as much work out of each of them than before the crash, should they heed the President’s call to add new talent. Efficiency and productivity have become well developed, and companies would be wise to put that productivity to work. Identify the area in your business where there is the best potential for growth, and bring on new talent to achieve the objective. If permanent hires are too much risk for the company, consider using contracted or temporary labor.”