Thursday, September 23, 2010

Andy Stern's plan to create 12 million new jobs

Andy Stern's plan to create 12 million new jobs
It’s Time to Put America Back to Work
Andy Stern
Senior Research Fellow, Georgetown Public Policy Institute
Former President, Service Employees International Union
September 9, 2010

If we want to return the country to the kind of strong and stable economic growth that provides good jobs and decent wages -- not to mention is necessary to solve our long-term fiscal crisis -- we need to create 17 million new jobs. This would cut our unemployment rate by about half over the next two years.

But to create 17 million jobs, we need big, bold ideas. So, let’s come up with a plan. And let’s force our leaders and employers to act. My opening bid is 12 million jobs and I want you to call or raise me.

The reality is that job creation will cost some money. But in my plan, taxpayers either won’t have to pay a dime up front or all of their investment will be paid back and then some. In any case, the numbers should not scare anyone. If we can afford to pay nearly $800 billion to bailout out a few Wall Street banks, we can afford one-sixth of that amount to create nearly 12 million jobs.

My Jobs Bid:

Job Sharing Program.
Cost: $54 billion
Pay-for: Loans to Unemployment Insurance (UI) Funds to be repaid with a small UI surtax starting in 2013 on all employers.
Jobs created: 2.4 million

Infrastructure Bank.
Cost: $30 billion
Pay-for: One-time repatriation break for corporate earnings
Jobs created: 8.4 million

Youth Employment Programs.
Cost: $46.5 billion
Pay-for: Financial Speculation Tax
Jobs created: 3.1 million jobs

Total $130.5 billion 11.8 million jobs
Net Cost to Taxpayers = $0

The details:

1) Adopt Job Sharing

This is an idea, supported by Kevin Hassett from the American Enterprise Institute and Dean Baker from the Center for Economic and Policy Research, that could rally broad support from the left and the right.

Both experts testified earlier this year that Congress should consider a plan that enables companies to avoid shedding employees by reducing hours instead of firing workers. If hours and wages are reduced by 10 percent or more, workers would receive a federal subsidy for 60 percent of their lost salary. As the economy truly begins to recover, employers would be able to add new employees rather than increase hours for existing employees until the recovery is on a self-sustaining path.

Reducing the rate of job loss by just 10 percent would have the same effect on employment as if the economy generated an additional 200,000 jobs a month or 2.4 million a year. Germany’s unemployment rate dropped from 9.1 percent to 7.6 percent after implementing such a policy in January.

Congress should immediately take up one of several bills that take this idea to a national scale.

Jobs Created/Saved: 2.4 million
Cost: $54 billion
Pay-for: Loans to Unemployment Insurance (UI) Funds to be repaid with a small UI surtax starting in 2013 on all employers.
Ultimate cost to Taxpayers: Zero

2) Corporate Repatriation Dollars to Fund Infrastructure Jobs

U.S. multi-national corporations have parked an enormous amount of income overseas. And current tax rules and loopholes allow corporations to defer taxes on current income by storing it outside of the country. The end result is that these corporations have accumulated massive amounts of income overseas that have never been taxed.

There are many good arguments for corporate tax reform that make the United States more competitive on a global scale. Many argue that we need to lower rates and we need to close the loopholes. But, while we wait for this argument to conclude, workers sit home unemployed and the overseas money is not put to good use in the U.S. economy.

So, let’s revisit the idea of a one-time repatriation tax break. I’m talking about a tax on past foreign earnings with a twist. We put the government’s share of the money; say $30 billion, into an Infrastructure Bank. We could also put the money into a Green Bank or other long term job creation programs. That $30 billion would leverage $180 billion more in investment.

For every $1 billion in infrastructure spending, 40,000 direct and indirect jobs are created. Even without leverage, we could create 2.4 million jobs with this funding. With leverage, 8.4 million direct and indirect jobs could be created and we could create the 21st century infrastructure system we need in this country.

Jobs Created: 8.4 million
Cost: $30 billion
Pay-for: One-time corporate repatriation tax break
Cost to taxpayers: Zero

3) Full Employment for Our Children: AmeriCorps and the Kennedy National Service bill “On Steroids”

The Great Recession might have severely negative consequences for generations to come if we don’t do something about youth unemployment. Unemployment is corrosive to one’s self-respect, and for our kids, it is an especially depressing way to begin their work life as they try to pay off student loans and gain professional experience. Unemployment during the first years of one’s career also has the potential to greatly diminish lifetime earnings and opportunity.

Today, 79 percent of parents believe their children will be less off, that the American Dream won’t be available for the next generation.

Young workers make up a disproportionate share of the unemployed. While 16-to-24-year-olds comprise 13 percent of the labor force, they account for 26 percent of the unemployed. That’s nearly 4 million unemployed young people.

We can restore the confidence of our children and inspire them to serve their nation by building on non-partisan ideas such as the Kennedy National Service Bill.

This program has already created opportunities for 250,000 Americans to be involved in full and part-time service to address some of our nation’s greatest challenges.

Assuming an average annual cost of $15,000 per person, for just $46.5 billion we could offer every 16 to 24 year old who wanted a job a national service opportunity.

They will still need to look for a permanent job. But in the meanwhile, they’ll gain valuable work experience, serve our country and avoid the consequences of my mother’s favorite adage -- an idle mind is the devil's playground.

We should pay for the program using a small portion of a Financial Speculation Tax — a small tax on all financial transactions. If designed correctly, the tax can generate revenue while encouraging investors to make long-term investments in companies that will grow over the long haul. Only a small portion of this tax — which could raise $150 billion annually — would be needed to employ our future generations in meaningful jobs.

Jobs Created: 3.1 million
Cost: $46.5 billion
Pay-for: Financial Speculation Tax
Cost to Taxpayers: Zero

That’s my plan. Call me or raise me!

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