The Bleak Jobs Picture

“The economic case for doing more is overwhelming,” says Economic Policy Institute (EPI) economist Heidi Shierholz. A recent EPI report demonstrates that job-creation policies pay for a large part of their costs by spurring growth and tax revenue—and that does not take into account the value of avoiding social and personal traumas.

More needs to be done to directly aid the unemployed. Only 67 percent of those currently unemployed get benefits. According to the Organization for Economic Cooperation and Development, the United States lags behind most of the 28 other rich countries in the group, replacing on average 28 percent of lost income (temporarily up to 99 weeks for some workers), compared to the leader Norway, replacing 72 percent of income for five years.

As a complementary alternative, the federal government could give tax credits to employers who reduce working hours with no (or little) reduction in pay, thus sharing the work, maintaining engagement, preserving income and encouraging new hiring, as Center for Economic and Policy Research Co-Director Dean Baker advocates. Work-sharing has largely kept unemployment from rising in many European countries (and reduced it in Germany), despite steep drops in GDP.

The federal government could quickly provide jobs for millions by helping states and local governments maintain their workforces. Rep. George Miller’s (D-Calif.) Local Jobs for America Act would have spent $75 billion over two years to retain public-sector jobs, and saved or created 675,ooo public and private jobs. The federal government could also directly employ people for projects such as retrofitting homes for energy efficiency, conserving natural environments, creating public art and providing social and educational services. University of Massachusetts economist Robert Pollin proposes creating 18 million new jobs by 2012 with public investment in such jobs financed by $700 billion in bank loans and $700 billion in new federal spending.