Yet a sizable credit could nudge companies thinking of hiring but hesitant to pull the trigger amid economic uncertainty, Greenstone says, adding that last year's credit was too small. He also would not limit hiring to employees who've been jobless for a minimum period as that discouraged businesses that simply wanted to recruit the best workers.
Studies found a $4,500 tax credit in 1977 -- $14,400 in 2008 dollars -- increased employment by 3 percent at firms that knew of the program vs. others that didn't, creating 700,000 jobs. Greenstone estimates that under his plan, employers would add about 6 million jobs that would be eligible for a tax credit, about 900,000 of which would not have been created otherwise.
Share jobs to save jobs
Perhaps the least expensive way to bolster payrolls is through work sharing, a program that encourages employers to avoid layoffs by cutting all workers' hours instead. For example, instead of laying off 20 percent of its staff, a company could trim all workers' hours by 20 percent. The government then would make up half the workers' lost pay with unemployment insurance -- so it's basically a wash or a small expense for state and federal coffers.
"It keeps people employed and at very little cost," says Dean Baker, chief economist of the Center for Economic and Policy Research.
Twenty-two states have work-sharing programs, but they're sparsely used. Baker says a federal initiative would be better publicized and could give employers more flexibility during the program to modify the number of employees getting reduced pay.
Although the recession's widespread job cuts are over, businesses are always laying off some workers, even when total payrolls are growing. An average of about 650,000 workers a month this year have been temporarily laid off, according to the Bureau of Labor Statistics.
If 10 percent of their employers adopted work sharing, 65,000 jobs a month could be saved.
In Germany, widespread adoption of work sharing helped lower unemployment to 6.7 percent from 7.1 percent before the global downturn despite economic growth that has lagged behind the U.S.
Lower corporate taxes
Many economists call for cutting the average 35 percent federal corporate tax rate to make the U.S. more competitive in a global economy. The average tax rate in Europe is 23 percent. Chris Edwards, senior fellow at the conservative Cato Institute, calls cutting the rate to 25 percent "the single best thing we could do" to grow jobs. Obama has said he wants to reduce tax rates while eliminating loopholes and deductions.
Trimming the rate to 22 percent would cost the government $81 billion in lost revenue but create 350,000 manufacturing jobs directly by 2019 as it prompts U.S. and foreign companies to open factories here instead of overseas, the non-partisan Milken Institute says. An additional 1.7 million jobs would be added as benefits ripple through the economy, Milken says.
Economists say it could take a few years for any tax cuts to grow jobs. But Aparna Mathur, an economist for the conservative American Enterprise Institute, says creating certainty about tax policies could lead firms to hire in the short term.
Train the jobless
At least part of the reason for the high jobless rate is that many laid-off construction and manufacturing workers, for example, lack the skills for growing jobs in heath care and technology. Thirty percent of companies surveyed by McKinsey Global Institute say they have had positions unfilled for six months or longer.
Darlene Miller, CEO of Permac Industries and a member of Obama's Jobs and Competitiveness Council, is helping spearhead a 16-week course in advanced manufacturing at two Minnesota colleges. The program, she says, aims to promote better coordination among colleges, businesses and area career centers to identify and train workers. Officials hope to expand the initiative across the country in three to six months, Miller says.
The council, she says, also wants to help schools graduate 10,000 more engineering students each year to meet a dire shortage of engineers. The panel aims to raise $100 million in private funding for scholarships, launch a media campaign to trumpet engineering careers and encourage schools with high graduation rates to share their strategies.
Cut red tape
The Chamber of Commerce calls regulatory roadblocks that delay construction, environmental and other permits "the most significant obstacles to new hiring."
McKinsey says "inconsistent and sometimes lengthy" reviews can add months or years to project development, discouraging foreign firms from locating in the U.S.
Susan Lund, McKinsey's research head, says the government should allow one-stop shopping so companies can secure various permits from a single agency as well as enterprise zones in which many permits would be pre-approved.
It would be no surprise if the job-creation debate bogs down in political wrangling, with Democrats favoring new stimulus and Republicans supporting tax cuts. But Ross DeVol, Milken's chief research officer, says any viable plan must include both.
"We can't allow ourselves just to be in one or two camps and believe those are the only prescriptions that will work," he says. "Think of it as portfolio of stocks and bonds. You wouldn't want to have all your investments in one particular area."
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