A Clash of Ideas and Ideals On the Jobs Front

January 25, 2014 — Leave a comment

At a recent Washington, D.C., summit, top economic minds gathered to debate long-term solutions to current economic woes.

It’s a crisp September day in Washington and economist Lawrence Summers, head of the Obama administration’s Council of Economic Advisors, appears as relaxed as the weather outside. This unshakable confidence is in keeping with Summers’s reputation, but he’s attempting to address (or evade) a difficult issue, and what many consider the single biggest failure of the $7 trillion fiscal policy he orchestrated: jobs.

“The overwhelming problem is a shortage of demand” for workers, said Summers at the National Journal Workforce of the Future conference.

While the U.S. stock market has largely recovered since reaching its recession low in March 2009, and corporate earnings over the last two quarters have largely beat analysts’ expectations, the U.S. labor market remains in dire shape. Some 14.9 million people are officially unemployed in the United States. The Obama administration originally forecast that the stimulus would keep the U.S. unemployment rate near 8%. In September 2010, it stood at 9.6%. It’s a U.S. born-problem with global consequences; fewer working Americans means far fewer customers for export- led economies like Germany, Japan, and China.

How does the United States protect the jobs it has and grow more jobs in the future? This was a matter of some dispute among the economists, captains of industry, and labor leaders in attendance. According to Emily DeRocco, senior vice president of the National Association of Manufacturers, the United States needs to revitalize its factory sector.

“The majority of the innovation that occurs in the [U.S.] economy is in manufacturing,” DeRocco argued. “If we allow our production to move offshore, design and research will move as well.” She also emphasized the need for more robust public/private partnership.

That means that the government should play a larger role in directing the economy, said Washington Post columnist Steven Pearlstein. “If you lose too much of the manufacturing, you will lose the development and the research. But you have suggested a limited role for government as a competitiveness policy. … Do Brazil, Germany, and China have weak governments? I don’t think so.”

Projected increases in health-care jobs over the coming decade won’t help job growth long term. Pearlstein cautioned: “Every time you read about heath-care jobs, it’s a deadweight loss on the economy. We can’t get rich taking in each other’s healthcare needs.”

A publicly funded but privately run “innovation fund” could better direct capital to where it’s most productive, according to former Clinton advisor Martin Baily. “If you look across the world, you can’t find a high-tech industry that was started without help from the government,” he said.

A more important role for government is enforcement of regulations of worker protections, according to several attendees. “[U.S.] wages have been stagnant over the last 25 years, so people have been making less but working more with more bills to pay. How do we give workers a voice so they can unionize to earn higher wages? We need to look at regulatory reform and enforce the trade regulations that we have,” said Anna Burger, secretary-treasurer of the Service Employees International Union.

Drew Greenblatt, president of the Baltimore-based company Martin Steel Wire Products, sees a dearth of training in science, technology, and engineering as the key obstacle to U.S. job growth. He suggested a national skill certification test that employers could give to potential emp l o y e e s t o de t e rmi n e t h e i r qualifications, instead of relying on the degree an applicant has acquired. “If [employers] had confidence in a national certification standard, we could bring people into the workforce faster,” he said.

Economic Policy Institute president Lawrence Mischel agreed on the value of a national certification standard but dissented sharply on the subject of qualified workers or the lack thereof. “The claim that we don’t have workers with the right skills or workers in the right place, so people who were useful six months ago are now obsolete-I haven’t found evidence for it. Investment in plant and equipment is at the lowest level in the postwar period. Every education group has seen their unemployment rate double. This [recession] is something that has affected every education group,” he said.

On what issues did the participants generally agree?

* The United States needs to revise its visa program to allow more highly skilled workers into the country.

* The workforce of the next decade will draw more heavily from African American and Latino populations, so improving education among these communities is critical to future competiveness.

* Disruptive technologies like automation and information technology will destroy the jobs as surely as they create new ones.

“You can’t look at the data from the last 18 months and not think something profoundly important and structural is happening all over the world. No matter how successful we are in creating demand for employment, some skills will be less relevant than they were,” said Summers.


About the Author

Patrick Tucker is senior editor of THE FUTURIST and director of communications for the World Future Society. E-mail: ptucker@wfs.org.


Originally published in THE FUTURIST, January-February 2011


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