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How to Create 4 Million Jobs in 90 Days

Politics / Recession 2008 - 2010 Feb 03, 2009 - 03:50 PM GMT

By: Ronald_R_Cooke

Politics Best Financial Markets Analysis ArticleLost Jobs - At least 23 million Americans are either unemployed (they do not have any job) or under-employed (they are being paid for less than 35 hours per week).  If unemployment increases to 10% of the workforce by the end of 2010, then 15,434,900 people will be unemployed. In this 2 year period, America will have lost more than 4.4 million additional jobs. America's Work Shortage Index (WSI) will increase from a total of 23,487,000 unemployed or under-employed persons at the end of 2008, to a Work Shortage Index of more than 21.9% by the end of 2010. Over 33.5 million Americans would be forced to sharply curtail their spending. Over 27% of all American households would be in financial trouble. (Reference 1)


Despite this shortage of work, however, the Obama Administration has thus far adopted the immigration and outsourcing policies of the prior G. W. Bush, W. J. Clinton, G. H. W. Bush, and R. Reagan Administrations. The result?  Not only have American workers been losing good job opportunities for more than 20 years, existing Washington policy guarantees over 1.5 million more jobs will be lost in 2009!

Is this what we want?

America's job losses include:

  • Over 6 million production related jobs in development engineering, manufacturing engineering, manufacturing, distribution, and administration. Key losses have occurred in vehicle manufacturing, computers and computer accessories, telecommunications equipment, electronics, electric components and equipment, medical equipment, industrial machines, pharmaceutical preparations, consumer electronics, household goods, toys and sporting goods, shoes and clothing, food and beverages, oil and petroleum products, natural gas, and vehicles.  Almost 2.5 million production related jobs evaporated during the 8 years of the recent Bush Administration. (Reference 2)
  • Over 2.3 million off-shore, outsourced, jobs in back office accounting operations, reservations, customer support and service, software development, maintenance, and support, paralegal services, document management, financial services, human resources, records management, aviation maintenance, health care, financial transactions, marketing and sales, and research and development. That's a payroll of over $27 billion in 2008.(Reference 3)
  • Over 3.6 million non-immigrant jobs currently taken by legally authorized working age foreigners within the United States.
  • Over 7 million jobs currently taken by illegal aliens.

The total?   Federal industrial policy has cost American workers over 18 million jobs. Good jobs. Jobs that pay well. (Reference 4). According to BLS data, over 30 million additional jobs in 160 business process occupations are vulnerable to Offshoring. (Reference 5)  In addition, we continue to ship production jobs out of America just as fast as we can.

Not only are we exporting mundane repetitive jobs, we are deliberately exporting the ability to grow our economy. We are giving away intellectual property and critical job skills to foreign manufacturers. Just as fast as we can. And foreign governments are doing a far superior job of supporting their manufacturing base.  The result? Thanks to Washington's obtuse industrial policy, millions of Americans now face economic privation.

Why?  Because Congress and four Administrations believed it was politically correct and politically expedient to do so. Democrats and Republicans. And despite rising unemployment and under-employment, existing Federal policies guarantee there will be a continuing drain of American jobs.

Why do we want this?

Time Out

OK.  Before we launch into a discussion of a solution, I would like to make 3 points.

  • Few people believe it is possible, practical or even desirable to get all these jobs back. We do live in a global economy. Free trade does reduce the cost of goods and services. International trade is better than international conflict.
  • I strongly favor the free interchange of jobs among and between workers who live in one of the OECD nations.  We can learn from each other. We can create lasting friendships.
  • I also strongly favor the creation of more international University level student exchange, education and work opportunities. Participation should be encouraged for every under-graduate, and a requirement for every Master's Degree candidate.

In other words. I am not an isolationist for one very simple reason: the more we work together, the more we learn from each other, and the more likely we will come together. That's good - if we think world peace is a virtue.

But

But – and there is always a “but” – the first duty of our Federal Government, indeed the first duty of any national government, is to protect the welfare of its citizens. It is OK to encourage foreign employment when times are good, but when the economy dumps into a recession, then all the rules change.

Here is what I believe. Given America's current economic slump, and until American unemployment drops below 5 percent, our employment policy should be guided by one simple objective:

American Jobs Are For Americans

Period.

How many jobs do we need to create? If unemployment increases from 7.1% to 10.0%, and our goal is to reduce unemployment to 5% of the available workforce, then America needs to generate over 7.7 million new jobs by the end of 2010.

That's unlikely to happen.  We are being told the stimulus package before Congress will create or save from 3 to 4 million new jobs.  That's not enough. Not by a long shot. We need an alternative strategy. One with far less risk.

Fair warning to Congress and the Obama Administration. You will not get a second chance. The proposed stimulus package will drain the coffers and debase our currency. If it fails, America's credit will be dead meat.

Action Proposal

So. What is the alternative? I propose a 3 Part plan.

Part 1.  The foundation.  America needs to develop a constructive, positive, and supportive industrial policy. One that creates good jobs for Americans. Permanent jobs we can do with pride.

Part 2.  Make Tough Policy Decisions. Re-examine our offshore outsourcing and work visa programs to shift a higher percentage of employment to American workers.

Part 3. Economic stimulation. Based on the policies thus developed, we need a stimulate our moribund business community into action. We can do that with a package that focuses on long term economic growth. Key areas of attention include energy, bio-science, health care, electronics, software, communications, nano-technology, infrastructure, public transportation, and the manufacture of capital goods. (More on this in my next essay.)

Stop The Bleeding

In the following text, we examine offshore outsourcing and work visa policy because it is the easiest and quickest way to generate American jobs. I propose  7 Steps.

Step 1. Pay a living wage for American jobs. Raise the minimum wage to $9.00 per hour. Create a substantial differential between unemployment benefits and the minimum wage by limiting unemployment benefits to the equivalent of $6.00 per hour.

Step 2. Prohibit the export of American jobs. Until the unemployment rate drops below 5%, employers may NOT transfer internal functions to off-shore locations, and they may NOT contract to have those functions done by a company that uses foreign workers in the United States. (Reference 6)  Estimated jobs created or saved in 2009 and 2010:  1.0 million (includes the termination of existing contracts).

Step 3. Place a premium on work visas. Charge a flat fee of $12,000 for each work visa and limit the duration of all visas (including those which have already been issued) to 12 months. Charge an additional $12,000 for each work visa renewal. Estimated jobs created or saved in 2009 and 2010:  2.4 million (66% of work visas, includes termination of existing permits).

Step 4.  Create a Guest Worker program by issuing 6 month temporary visas to alien workers who will earn no more than $6.00 per hour. Charge $200 for each guest worker visa issued. The combination of steps  1 and 4 should create an estimated 1.7 million jobs (20% of illegal alien workers). 

Step 5.  Establish a realistic, constructive and positive industrial policy. Encourage the restoration of America's manufacturing base. Use import fees and appropriate regulation to level the playing field with subsidized foreign competition. Estimated jobs created over time: 3.0 million (50% of lost manufacturing jobs).

Step 6. Training and education. Use the fees thus collected in steps 2 – 5 to establish and support job training programs specifically aimed at the jobs thus created or saved. Establish both quantitative and qualitative job skill development objectives.

Step 7.  Enforcement. Persons or corporations who violate these laws should be fined as appropriate, per violation. Require all employers with 15 or more employees to use the E-Verify program to confirm applicants are legally entitled to seek employment.

Let's see. We just created at least 8.1 million American jobs in less than 90 days. And we didn't have to spend a dime of taxpayer money. If that's so easy, creating or saving a mere 4 million jobs should be a breeze.

Reality

Don't like my numbers? Do your own homework. This first thing you'll discover is that our politically correct and politically expedient people in Washington have never asked the DOL to even study this issue. For example: DOL/BLS Table A-8 “Unemployed Persons By Reason Of Unemployment”, does not tell us how many of these jobs were lost because they were (effectively) exported. Doesn't that seem odd? Could it be our “political leaders” are more concerned about the rights of illegal aliens than the rights of the American worker? Have they found it “profitable” to ship American jobs to foreign nations? Why are they focused on bringing foreigners into the United States to take American jobs when we are headed for catastrophic unemployment?

About Inflation

Yes this policy change will contribute to a higher rate of inflation. That gives us a gruesome choice. Unemployed people with high rates of inflation, or employed people with high rates of inflation. Given Federal monetary policy, higher rates of inflation are a given. Creating a (temporarily) restrictive offshore outsourcing and work visa policy won't make much difference to the cost of living.

Yes We Can

We can solve our unemployment problem by making a few simple changes to our offshore outsourcing and work visa policies. And we don't have to spend a dime of taxpayer money. We don't have to bankrupt America with a pork laden stimulus bill. We don't have to risk our economic future, the economic future of our children, and the economic future of our grandchildren. We don't have to dump America into the abyss of depressing socialist economic policy.

Yes, I know. I'm proposing to upset the status quo. Giving American jobs to foreigners has become a BIG business. Few intellectual elitists will like my proposals. Special interest groups will go ballistic. Lobbyists will lie to confuse the issues.  Democrats will fumble for politically correct words. Republican's will sputter in confusion. Foreign governments will posture and complain. (Reference 7)

Lots and lots of whining. But for me, our first priority is to provide job opportunities for American citizens.  Let's focus on putting Americans back to work . 

Conclusion

One can argue with my numbers. One can whine about my proposed solutions. But the underlying thesis will remain. It does not change.  The first obligation of our political establishment is to put Americans back to work. If we are willing to change our offshore outsourcing and immigration policies, we can create several million job opportunities and sharply reduce the size of the stimulus package now before Congress. This approach to our economic crisis poses significantly less risk for America's financial health, and is far more likely to be successful.

So Mr. President.  If I were running America, I would create 4 million jobs in 90 days. And not spend a dime of taxpayer money. All we need to do is conduct a serious review of our work visa and offshore outsourcing policies.

We can do it.  Yes we can.  All we need is the political will in Washington.

Ronald R. Cooke
The Cultural Economist
Author:  Detensive Nation
www.tce.name

Cultural economics is the study of how we interact with economic events and conditions. Culture, in this sense, includes our political systems, religious beliefs, psychology, history, customs, arts, sciences, and education. The term "Economics" refers to the extent and process of how we employ capital, labor and materials. If human existence is dynamic, then economics – as a science – must be able to characterize the interaction of culture and economics in contemporaneous terms.

Ronald R Cooke Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Orvin Five
04 Feb 09, 01:36
You can't create jobs without destroying value somewhere else

Often it costs less for a company to employ a foreigner and/or outsource work beyond our borders.

You cannot increase America's wealth by forcibly preventing employers and/or companies from taking advantage of the above-mentioned savings. These now-absent savings merely show up as costs elsewhere in the economy. It's like any other form of protectionism.

Nor can the government cause these labor-cost discrepancies to disappear through various government programs (all of which have their own offsetting costs). If the free market has already determined that a certain job costs less to perform overseas, then that's just the way it is. You cannot legislate these cost-savings away.

During times of economic stress, even populist measures temporarily look appealing. But I am confident that the world is more sophisticated now, having heeded the lessons of von Mises, Hayek, Rothbard, etc. We (thankfully) will not end up "protecting jobs" this time around by force, even though we may have a few legislative lapses. Even at Davos, you could hear a chorus of voices who understood this logic.

The only exception is when cheaper labor is the result of effective slavery overseas, and the employer knowingly collaborates in the system. In that sense, one could make all kinds of moral arguments that would indirectly "protect" local jobs against foreign labor in many instances. But these arguments would relate entirely to the well-being of the foreign workers, and would have nothing to do with the economic well-being of Americans upon which your thesis apparently is based.


Peter Batum
04 Feb 09, 06:24
United States on its Own

The US has supported its excesses by incurring over 50% of the world's debt.

In dealing with the US.

My proposal to solve this problem is for the governments of the world to institute a US currency tax of half a percent tax on any conversion to US currency on the way in. Then use the funds raised to support their own industries that have trouble competing against the US industries because of subsidization. This creates jobs in their own country an prevents the Yanks from further excesses.

Actively discourage any investment in US treasuries bonds.

In industries that don't get US subsidization like the entertainment industries etc provide grants and therefore jobs to compete with the US product.

This person has shown the way. Find policies to provide jobs in your country and let the buggers who caused the problem suffer.

Let them be and island isolated from the rest of the world.

cheers


Ringo
04 Feb 09, 12:25
Unemployment/ Underemployment

If ever there was a sorry list of proposals this one is it and it is for several reasons that should be apparent to all. I'll list just a few.

1) "Pay a living wage for American jobs"; the truth is that at depressed wage rates, Americans aren't competitive as a labor force because a) they don't make anything except a few specialty items, and/or b) they are poorly educated, and/or c) they don't much want to work anyway which means that when they do work, they aren't terribly productive.

2) "Establish a realistic, constructive and positive industrial policy"; the policy makers don't want the U.S. to be an industrial power; they see that as 19th century and they want a "green" economy, not one of smokestack industries.

3)"Create a Guest Worker program by issuing 6 month temporary visas"; that's a bureaucratic boondogle that'll go nowhwere because the U.S. Gov't doesn't enforce the borders to begin with and with Obama is likely to pass a blanket amnesty negating the need.

4)"Training and education"; who's that going to help when the U.S. school system already enjoys a 50 percent drop out rate. Why waste money trying to train people that can't read. Their degree of functional literacy is the bare minimum to sign up for free gov't housing and food stamps.

5) "Place a premium on work visas"; that's not quite brilliant; all you would do is stop the importation of bright, well educated people from coming into the country to do something productive in the few areas such as computing where the U.S. makes something the world wants.

It's all daft........give it up and move along to something that might work.


krishna rao
04 Feb 09, 23:36
missing comment

I sent my comment on this subject and several others of late , but dont seem to find it. Can you please tell me if you received it or not?

Thanks ,

Krishna


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