John Fullerton, a friend and the founder of The Capital Institute, celebrated Labor Day with some thoughtful ways to create more jobs – now.
Here’s the challenge we face as defined by Fullerton:
“To create 7 to 10 million net new jobs in the United States over the next 5 years, while keeping the 130 million people currently employed in their jobs – a 5%-7%increase in employment…We need to break the challenge down into two pieces: emergency triage, and long-term structural reform.”
It’s time that big business stop whining about confidence and regulatory uncertainty, when they are making money hand over fist. Profits at American companies are higher then they have ever been in 60 years, at an annual rate of $1.659 trillion in the third quarter of 2010. If they want to continue to feed at the trough, they need to take much greater responsibility for our economic recovery. In the long run, they depend on our recovery to continue their economic success.
Follow along with Fullerton’s logic.
The Fortune 500 employs about 18 million people according to my research. They can, if they chose, productively increase employment by 5 percent and create low-cost intern programs for unemployed high school and college graduates equivalent to another 5 percent — 1.8 million jobs and 1.8 million internships within a year — at no harm to profit margins while generating numerous long-term corporate benefits. To accomplish this, they can:
- Reverse, at least temporarily, the growing (and unsustainable) wealth gap to provide funding for the new jobs. Why not a three-year compensation cut of 3 percent for employees earning over $250,000, 5 percent over $500,000, 7 percent over $1,000,000, 25 percent over $5,000,000? CEOs should compete to be bolder and show us real leadership. Remember, some of our sons and daughters have given their lives for our country. Talk to their families about sacrifice.
- Job share and shorter workweeks. See Germany for example.
- Or, tell Wall Street that it’s in the company’s long-term interest to erode profit margins a bit now to be a “Corporate Patriots” leader. Certainly Apple’s margins can absorb the impact of making something in the U.S. — probably could even charge a premium for an “American Apple.”
Mid sized businesses can probably achieve collectively the same as the Fortunate 500, but to be conservative let’s assume only half, another 1.8 million jobs and internships.
There’s your “stimulus program” that creates over 5 million jobs within a year. Add some politically feasible stimulus initiatives such as an employment tax credit to grease the wheels and funds to prevent teacher cuts and you have real “animal spirits” catalyzed by the human spirit.
Government should, must, be part of the solution. Fullerton continues:
Government policy should concentrate on one task: stimulating the critical long-term structural reform that the new economy will require in order to meet the profound 21st century challenge of absolute resource limits. They must:
- Reexamine the principles of our global trade philosophy to reflect the reality of absolute advantage that comes with the free mobility of capital in contrast with theoretical “comparative advantage” that requires assumptions that don’t exist in the real world. What is good for General Electric may not be good for America.
- Develop a strategy to build economic resiliency, which may come at the cost of our obsession with “efficiency.” Systems can be too efficient and collapse (see finance). The decentralization of food and energy production to sustainable systems is job one. Eliminating fossil fuel and agriculture subsidies is the place to start. Big challenge worthy of political capital, vital payoff.
- Focus on stimulating the creation and expansion of small business where 65 percent of the jobs are and over 100 percent of net new job creation comes from. Eliminate big business corporate welfare. If there’s no screaming and no stock prices of certain companies going down, it’s not working.
- Shift from promoting an “ownership society” aimed solely at housing to an “ownership society” aimed at business enterprise, thereby truly democratizing wealth and creating a nation of business owners.
Read the complete story at: http://www.huffingtonpost.com/john-fullerton/job-creation-ideas_b_949522.html?view=print&comm_ref=false