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Leo Hindery Jr., Chairman, U.S. Economy/Smart Globalization Initiative at the New America Foundation, joins me here in writing about our fear that just as catastrophic as the jobs crisis is its disappearance from political debate. We offer solutions.

America is facing a catastrophic jobs crisis. Not since the Great Depression has official unemployment hovered above nine percent – where it is today – for more than 20 months. Millions of American have given up looking for a job altogether.  Even worse, real unemployment is more than 18%.  Yet Washington overall has obviously yet to embrace a large-scale job creation agenda. Even if we reach consensus around the deficit – the only economic issue even getting any attention these days – it will do little to help the 29 million Americans who are unemployed in real terms. If we do not seriously tackle jobs, our country may never regain its competitive global edge.

We recently co-chaired a Task Force on Job Creation, seeking real solutions to the jobs crisis plaguing our country. This group of policy makers, economists, business and labor leaders developed a series of 15 immediate recommendations for reversing the crisis, outlined in a new report, "Vision for Economic Renewal: An American Jobs Agenda."  We found there are six vital policy areas that our government must address in order to create millions more jobs now: manufacturing, trade and globalization, U.S.-China trade, the infrastructure crisis, jobs in the green economy, and youth unemployment.

Washington is often a city of Chicken Littles, which makes ringing the alarm bell difficult.  But once Washington wakes up from its deficit hangover, politicians will realize something that most Americans have known for months:  The sky has already fallen.

Here’s what we can and need to do:

America’s manufacturing sector must be a cornerstone of the nation’s economy and thus one of the essential drivers of the recovery we are still searching for. Yet manufacturing remains in a decades-long free fall, with, like most other sectors, stagnant wages for more than a decade. In just three years, our manufacturing sector has lost over 2.5 million jobs, and over the last decade, we’ve lost more than 6 million.  The continuing decline of manufacturing will limit job growth and jeopardize our national standing. Industries that were once great contributors to our country – auto manufacturing, shipbuilding and machine tools fabrication – are barely shadows of what they once were.  Meanwhile, jobs in other leading manufacturing sectors, like aerospace, are being offshored every day.  

Why the decline? One of the fundamental reasons is simply that the U.S. lacks a national manufacturing strategy that integrates policies around tax and investment, R&D, domestic procurement and currency valuation. And we lack any plan for how to restore this sector. Our task force identified several ways to bring back this sector:

•    Buy-Domestic Procurement requirements. No single measure would do more to help resuscitate U.S. employment, particularly in manufacturing, than an encompassing buy-domestic government procurement requirement. All infrastructure projects funded and guaranteed by the federal government and the proposed infrastructure bank should require purchases to be made in America rather than overseas, consistent with our international trade agreements. As well, to qualify as “Made in America,” at least 75 percent of the content should have to be manufactured within our borders. To make that happen, Congress should require domestic content calculations to be effective and transparent. Domestic sourcing requirements for all government procurement programs (e.g., Buy American, the Recovery Act) and programs that support U.S. exports (e.g., the U.S. Export-Impact Bank) should also be reviewed to ensure that contracting agencies are obeying and implementing the requirements. The Defense Authorization Bill passed in December that requires the Pentagon to buy solar panels from U.S. manufacturers is a good model. In addition, Congress needs to enact an all-of-government successor to the 1933 Buy American Act.

•    Link an investment tax credit directly to jobs.  A 10% investment tax credit for the rehabilitation and renovation of existing manufacturing facilities would pump billions of dollars into modernizing America’s plants.  And with an additional investment tax credit for new equipment, businesses could retool their factories.

•    Determine which government programs create and support U.S. jobs. We should require those bidding or applying for government contracts, assistance, grants or awards to provide detailed Employment Impact Statements in the application process. Results would factor into the outcome of the project or transaction.

Trade and Globalization
Our trade policies and unaddressed ills from globalization exacerbate America’s manufacturing industry woes. Just since 2001, the U.S. has had massive annual trade deficits totaling over $6 trillion. Yet the U.S. has no precise strategy to compete in a globalized economy.

In many parts of the developing world, workers toil for minimal pay under harsh conditions because organizing against unfair treatment is prohibited. This cheap labor seduces large multinational companies to move production overseas, where healthcare, pension and environmental costs are minimal. While human rights are plundered, U.S. workers are also losing their jobs. And many of the Asian countries where these jobs are going are manipulating their currencies to keep them undervalued against the dollar and are providing massive illegal subsidies and other unfair trade benefits.

We must mobilize to restore balance and mutual benefit to international trade. Let’s call on our leadership to:

•    Restructure the tax code so American companies stay here. Right now, we provide tax incentives for companies to invest overseas, a sure sign that our economy works best for big business instead of for regular Americans. We must fix our tax code so corporations are not rewarded for closing plants and shipping jobs to China. In addition, Congress should offer partial tax rebates on exported goods and impose equivalent taxes on imports.

•    Protect national security manufacturing. Today, the U.S. has an $80 billion annual trade deficit with China just for “Advanced Technology Products,” many of which are essential to our national defense. Congress should pass legislation requiring that certain critical items be subject to a national security impact statement before allowing their manufacturing overseas.

•    Enact temporary tariffs. Congress should enact temporary tariffs to protect our high-value manufacturing. A temporary policy of import tariffs, coupled with encouragement of foreign direct investment, would provide the U.S. with all the benefits of free trade without promoting a low-wage workforce.

•    Create a new Justice Dept. bureau to enforce trade. On the issue of enforcement, an independent office within the Department of Justice would be tougher and more effective at ensuring that our trade agreements are complied with.

•    Initiate trade cases under the U.S. trade remedy laws. The U.S. should spearhead an Unfair Trade Strike Force to be deployed when nations violate trade laws.

U.S.-China Trade
It is impossible to overlook China when considering how to correct globalization’s unwanted fallout. The Chinese economy has been growing at ten percent a year for the last 30 years. Such unprecedented economic growth is at the root of China’s dramatic surge in military power, international political weight, and financial influence. These developments, with their economic and geo-political implications, are not simply the outgrowth of free market forces and fair trade. Rather, they stem from sophisticated industrial and mercantilist trade policies, often illegal, that China has instituted to establish its great power status.

The U.S. economy will continue its decline unless our leaders in Washington take immediate action to take on Chinese economic practices.

•    Create a White House office to focus on American competitiveness. A transparent office dedicated to gathering independent intelligence on our trade competitiveness with China would improve our economic standing. It would help align trade and tax policy so that private sector incentives match the public interest.

•    Pursue a hard line on Chinese economic policy.  From intellectual property theft to restrictions on rare earth mineral exports to extortionist indigenous innovation purchasing policies, China is playing by a different set of rules and we’re doing little about it.  Our government must be willing to challenge and mitigate the disastrous effects of Chinese economic policies on American manufacturing and trade. This should start with a clearer focus from the White House, guided by the independent body recommended above and directed at all federal agencies. Initiatives should include bringing cases in the W.T.O., imposing tariffs when necessary, and requiring rigorous reviews of China’s planned investments in American ports, markets, natural resources and transportation industry.

Infrastructure Crisis
Coincident with the loss of trade and manufacturing is the decline of our nation’s infrastructure.  After years of under-investing in public infrastructure, America faces an infrastructure deficit of $3 trillion that is impeding economic growth and undermining our economy’s efficiency. We need to spend $2.2 trillion over just the next five years to meet America’s core infrastructure needs, according to the American Society of Civil Engineers. But actual spending plans fall far short.

•    Create a levered National Infrastructure Bank. The administration and Congress should create a national infrastructure bank that would be an independent financial institution owned by the government. Able to fund a broad range of infrastructure projects beyond roads, rails and runways, it would make loans and loan guarantees and leverage private capital. It should be able to sell or issue general purpose bonds to raise funds for lending and investment, sell specific project bonds when necessary, and invite private investment, along with state and local government pension plan investments.

Green Economy
Employment opportunities in the “green economy” can provide some relief, although not as much as some project. According to Booz Allen, green projects will create eight million jobs by 2013; the Global Climate Network puts that number at 20 million world-wide by 2030.  Bolstering this segment of our economy will put people to work in manufacturing jobs that have the greatest multiplier effect, and will stimulate more economic growth.  Leaders in Washington must do more to encourage growth in this industry.

•    Extend the Cash Grant Program for renewable energy production.  This program converts non-refundable tax credits for renewable energy production into cash grants.  Extending the program until the equity and debt markets recover will help create jobs and avoid further job loss in the industry.

•    Lengthen the period of the Advanced Manufacturing Tax Credit.  ARRA authorized up to $2.3 billion in tax credits for investments in qualified advanced energy projects at manufacturing facilities, such as energy storage, electricity transmission, energy conservation technologies, and others.

•    Expand Title 17 Loan Guarantee Program. Title 17 of the Energy Policy Act of 2005 provides federal loan guarantees for the construction of energy-related facilities that use “new or significantly improved technologies” which are “non-commercial” and have high technological risk. These guarantees lower the cost of capital for these projects. Broadening Title 17 to include energy-efficiency investments would help spur this market and create new jobs.

Youth Employment
The hardest hit among the unemployed are young people. Almost 25 percent of teenagers from 16 to 19 are officially unemployed. For young adults aged 20 to 24, unemployment is nearly 16 percent – a number not seen since 1948. Many of these disconnected youth are at risk of becoming permanently disengaged from the labor market. Young people who do not have a successful work experience by age 25 are also at greater risk of lifelong poverty.

•    Extend the Work Opportunity Tax Credit (W.O.T.C.) beyond August 2011. This law provides small businesses with tax incentives to hire people who might ordinarily struggle to find work – for example, those with lesser skills and veterans. Congress expanded the tax credit in 2009 to include the tax credits for hiring disconnected youth. Our ongoing national youth unemployment demands that this W.O.T.C. provision be extended well beyond August of this year.

Our national leadership is responsible for tackling the extreme real unemployment and stagnant wages crises. President Obama has already shown a strong willingness to reform health care and regulate the financial services industries. Today, however, our nation needs, from all of Washington, that same passion and commitment directed at job creation. It’s time our leaders show the moral courage that defines true leadership and resolve to restore what all good Americans want and need: the security, well-being and self-respect that come from fair employment and wages.


Leo Hindery Jr. is chair of the Smart Globalization Initiative at the New America Foundation and an investor in media companies. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. and Liberty Media.


Don't worry. The sky hasn't fallen. All we need to do to solve unemployment is cut taxes on the rich and corporations.

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Comment Preferences

  •  Good ideas. (3+ / 0-)

    How do we get them implemented?  

    The American people must wise up and rise up!

    by TomP on Tue Jul 26, 2011 at 02:06:21 PM PDT

  •  The same passion toward job creation... (9+ / 0-)

    ...will NEVER come from Washington as long as we have people in charge who just. don't. see. it. as. a. problem. They all HAVE jobs. We should do more to see that many of them no longer do.

    Don't tell me what you believe. Tell me what you do and I'll tell you what you believe.

    by Meteor Blades on Tue Jul 26, 2011 at 02:07:33 PM PDT

    •  That's not it. (0+ / 0-)

      It's not apathy.  It's active evil.  The Powers That Be realize full well that they need an underclass just from a functional perspective.  Nobody's going to shovel shit unless they're so desperate as to be forced into it.  On a broader basis, too many of them are functional sociopaths.  They have their position in society and know that they need an underclass to support it.  They need people who are desperate enough to lick their boots for a chance at table scraps.

      •  I think we're talking about two... (2+ / 0-)
        Recommended by:
        tardis10, Onomastic

        ...different groups of people here. There are some among the powers-that-be who realize the need for good jobs, some for real, and some because they recognize what smart member of the ruling class understand: don't piss off the underclass too much. Then there are, of course, those you're talking about.

        Don't tell me what you believe. Tell me what you do and I'll tell you what you believe.

        by Meteor Blades on Tue Jul 26, 2011 at 02:32:40 PM PDT

        [ Parent ]

        •  There are damned few of the former..... (0+ / 0-)

          ....and far too many of the latter.  Even the former generally aren't 'good' by any reasonable standard, they're just less evil.

          Bill Gates has his charitable foundations, but that mostly just serves to distract people from the fact that his entire career is a textbook example of how Old Money families maintain their hold over society.

    •  You are right, Meteor. (0+ / 0-)

      That is why the USW is working furiously to ensure that class of GOP freshmen never makes it to sophomore.

  •  Tax any company..... (1+ / 0-)
    Recommended by:

    ....that offshores jobs into the stone age.  If you're not servicing that market, you don't need to be hiring people there when there's such high unemployment in your own country.  While we're at it, end the H1B program entirely, or at the very least introduce a requirement that the prospective employee has a skill that most Americans don't, like fluency in an obscure language for a region you're doing business in.

    Oh, and fuck the Bush Tax Cuts.  Restore the Eisenhower tax rates.

    Emphasize unions and unionize industries that currently aren't organized.

  •  Right Approach - Not Rocket Science (2+ / 0-)
    Recommended by:
    tardis10, Onomastic

    This describes a straight forward way to add jobs. Because we have not seriously worked hard problems for 30 years in this country we have lost the necessary skills. Look at the political circus in DC over the debt limit.

    The public needs to understand this proposal and take action to force the politicians and corporations to act for the better good.

    The political parties are not talking common sense like this post.

    Is there a report that goes along with Lou Hendery's proposal?

  •  Tipped for the discussion, but disagree on some... (1+ / 0-)
    Recommended by:

    Broadly, I agree, but not on everything.  Rather than shut themselves off even further from international best practice, the US needs to climb down from its "we're so much the best we don't have to look elsewhere" and look at solutions others have found.  The US has a remarkable reservoir of skills, unequalled in the world, but a visceral rejection of the "not invented here" solution.
    Yes, stop subsidising the export of jobs; but don't penalise, as you suggest, foreigners offering solutions.  Yes, boost manufacturing - but in reality, the issue is not "manufacturing" vs. "services", but "value-added".  A hamburger-flipper or cleaner is in the same "services" category at the Wall Street banker, and it's frankly a toss-up who does more for the economy.  Similarly, there's no point in advocating the relocation of factories making dogs' squeaky-toys to the US.  But, you only get the high value added jobs if you have an educated work force.  Education is a national strategic priority, not a bleeding-heart liberal luxury.

    γνωθι σεαυτόν

    by halef on Tue Jul 26, 2011 at 02:40:53 PM PDT

    •  Need a national priority in manufacturing (3+ / 0-)
      Recommended by:
      tardis10, Onomastic, slippytoad

      That is one of the themes of the post.

      In 1978 I left a faculty position in a near Ivy League school to work for Bell Labs which at the time was referred to as the best R&D labs in the world.

      There was a small group who did cutting edge research, but 90% of Bell Labs was connected to products and innovation. The long distance network, cell phones, the transistor and so forth came from Bell Labs and the manufacturing unit, Western Electric.

      There were many Ph.D.s and MA engineers and scientists working in a wide variety of areas like chemistry, physics, electronics, software, integrated circuits and so forth.

      Western Electric had a run of over 140 years and now even the name is gone. Bell Labs now is a subsidiary of a French company.

      We need solid manufacturing for jobs because the productivity improvements come from this area.  We need good engineers to work with the manufacturing. There is a lot to learn when doing things in the real world.

      The fads changed, finance took center stage, and tax incentives were granted for outsourcing and the result was the export of jobs.

      This post is a way to add jobs.  Some months ago Obama made a speech to CEO's telling them to add jobs. That doesn't do what is needed. Along with proposals like this a national awareness of the importance of this and the change of status of manufacturing is an essential step.

    •  If you have no job (0+ / 0-)

      making squeaky toys sounds pretty good. Don't forget the current unemployment rate.

  •  Solar Industry says (1+ / 0-)
    Recommended by:

    480k jobs, Re 10% in 10 yrs, Wind says about the same, 20% in 20 yrs. Smartgrid says another 390k jobs over 20 yrs. Throw in 100 gigawatts of storage, for 500k jobs over5 20 years. @ million tops, with significant start up times.

    Solar Industry says it will take at least 3 yrs to build the factories that make solar panels before we can actually get around to large scale installation.

    You're saying some guy, is saying 8 million jobs in green energy by 2013...... Thats utter Bullshit. You might consider checking out the veracity of stuff you quote, with the actual industries involved.

    Because it reflects on your veracity.

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Tue Jul 26, 2011 at 04:18:03 PM PDT

    •  Green Projects can include many things ,. . . (0+ / 0-)

      for instance in building a green building, other construction jobs are created, design jobs, leasing jobs, etc. etc.

      Also, it's not clear what the start point for all this job creation is. The calculation might refer to 2010, or earlier.

      •  Fine, 8 million is still a HUGE number (0+ / 0-)

        It represents an enormous leap in GDP, represents about 50% of the jobs we lost since Dec 2007, and represents a fundamental paradigm shift in financial, societal, cultural, tax policy, regulatory policy areas to a white paper style of optimum. All of which is wholly unbelievable.

        I dont mind optimism. And given 20-30 yrs most of what your diary cites is certainly more than possible. It is 2011, so if you wish to cite a study that is so old, so out of date, that the idea of 8 million jobs by 2013 is laffable..... then you run the risk of what could of been a nice diary, being laffed at.

        I'm particularly interested in the Post BP blowout, Fukushima world of renewable energy job creation. And in how tax policy can be used to incentivize solar and wind, and how those jobs lead to more FICA, and those effects on SS solvency.

        I have read my share of studies, white papers and reports, and think I have a fair understanding of how good it could be.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Wed Jul 27, 2011 at 12:00:08 PM PDT

        [ Parent ]

      •  2009 (0+ / 0-)

        Like I said, I've read enough that I think I have a good handle on how good it could be, and whats cheerleading.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Wed Jul 27, 2011 at 12:10:27 PM PDT

        [ Parent ]

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