August 14, 2010 09:30 PM UTC

How do we resolve the core Jobs issue?

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• by: DavidThi808

Ok, let’s say the Democrats in Washington were able to pass everything they wanted to address the jobs situation. What would we get? More money for the states to keep state and local government employees employed and additional stimulus money. And if all we faced was a financial meltdown, this would be sufficient. But I think we’re facing a much larger problem.

When the industrial revolution occurred, the increase in productivity meant that there were more people than jobs. It took generations to sort that out and in the meantime many starved, and many more had lives of economic poverty. I think we’re facing a change equally fundamental today where 70% of the workforce can provide for 100% of the population. In addition, the number of blue collar jobs that pay a middle class income are dropping dramatically.

I think this is a large part of why this recession was so bad – a lot of the labor that built the bubble was financial paper that moved money in circles which provided a lot of white-collar jobs. And it was funding unnecessary home building which provided a lot of blue-collar jobs. But all those jobs produced nothing other than a speculative bubble and so when the house of cards collapsed, those jobs disappeared – forever.

Yes rebuilding our infrastructure, building up green power sources, etc. are all useful tools to specifically address the recession today. But that work provides almost no jobs after the work is completed. Yes making loans available to small business is necessary for them to expand, but it doesn’t do much good if there are no additional sales. The “solutions” proposed don’t do squat to address the fundamental challenge we face.

So what do we do? I have no idea. And I don’t think having a giant meeting of the great economic thinkers will figure it out – Clinton had a meeting like that in ’92 and the word Internet never came up. But I do think we need to start talking about it. What do we do when manufacturing requires 2% of the workforce as farming does? Because this transition is occurring a lot faster. And the high-tech industry does not, nor does it need to employee a lot of people (our goal is to reduce the people needed to perform a job – including our own).

If the President and Congress are not even looking at this problem, then we’re left to be thrown around on the winds of change with no control over our destiny.

One Suggestion

I don’t think this idea speaks to the core question, but I do think it will help us find solutions, and do so by having many people each in their own way find an answer that works for them. My suggestion is a G.I. Bill for the unemployed.

The G.I. Bill was not passed to thank the troops (although it was sold that way). It was not passed because it would provide a gigantic increase in our productivity (although it did). It was passed to keep the troops out of the job market and to have them re-enter over time. Congress and the President were very worried we would drop back in the depression if all of the soldiers immediately re-entered the job market.

The G.I. Bill was a great success, not only because it was the right thing to do for the troops and avoided a deep recession due to millions suddenly looking for a job. It was also one of the best investments the government ever made with the cost being paid back many times over in the increased productivity of millions who would otherwise never have gone to college. In sum, the G.I. Bill reduced unemployment and increased the long term economic output of the United States. Exactly what we need today.

I think we should offer an Unemployed Bill where the government will provide tuition (in-state public university amount), the equivalent of room & board, plus unemployment payments continue while in school. And the goal should be to pull 5% of the workforce into school (the true unemployment/underemployment rate is 17%). When you add in the additional people that the schools will need to hire, this will eliminate the high unemployment we presently face.

In return, anyone who takes advantage of this system then pays an increased tax rate on their taxes for X years after they finish. Maybe 2 years for each semester they are in the program. This way the government gets the investment paid back, both directly from the individuals in the program and indirectly through the increased productivity of our economy. What’s not to like?