How Can Congress Stimulate Job Creation in 2014?
By: John Rossheim
2013 may have been a mixed bag for business, but according to public opinion, it was a wash out for Congress.
In an early December Gallup poll, just 12 percent of Americans approved of the job Congress was doing. During the Federal government shutdown in October 2013, approval ratings sank to an all-time low of five percent.
That prompted us to ask a variety of sources, “How can the ‘do-nothing’ Congress improve its standing with job creation in 2014?”
Those who chose to respond mainly represented liberal groups; business-friendly, right-leaning groups such as the National Retail Federation and the US Chamber of Commerce largely declined to comment.
Remove Barriers to Job Creation for Small Business
Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance in Portland, Maine, wants to see Congress give consumers an incentive to patronize local businesses to stimulate job growth.
“Congress should pass the Marketplace Fairness Act,” Mitchell says. “Continuing to give large online retailers a free ride on collecting sales tax hurts small Main Street businesses, which create more jobs, and better-paying jobs, than the giants of e-commerce. Amazon creates just 30 jobs for every 100 that local retailers provide.”
Somewhat surprisingly, Amazon -- which has more than 88,000 workers -- says that it supports legislation to require online retailers to collect state and local state taxes. Why? Perhaps the one-click giant believes it can create yet another competitive advantage over its online competitors by designing a highly- efficient system for collecting and remitting those taxes.
Just how much do those uncollected sales taxes come to? More than $23 billion for all states that have sales taxes, according to the National Conference of State Legislatures.
Differing Opinions: Using Infrastructure to Create Jobs
Peter Cohan, principal of Peter Cohan & Associates, believes that civic infrastructure projects are low-hanging fruit for efforts to help job creation and a boost to the efficiency of our economy, which would be a boon to all employers.
“Congress ought to spend $50 billion to encourage a build out of national infrastructure -- bridges, roads, tunnels, dams, electrical grids, putting wires underground, and creating tax incentives for businesses to invest their huge cash hoards into productivity-enhancing technologies,” Cohan says.
Tony Montana, a spokesman for United Steel Workers in Pittsburgh -- a union that boasts 1.2 million active and retired members -- wants every component of those infrastructure projects to be made in America by Americans.
“Congress can easily create thousands of family supporting, community sustaining manufacturing jobs in the US by incorporating strong ‘buy American’ provisions into infrastructure investments and requiring government contractors to source their labor and materials domestically, “ says Montana. “Whenever and wherever possible, we should prevent our tax dollars from being used to create jobs overseas.”
Like much of Federal spending, many conservatives believe that infrastructure projects are a drag on the economy, being particularly prone to fraud, waste and cost overruns. They cite economists who say that infrastructure projects tend to shift construction workers from job to job, instead of creating new jobs for the unemployed.
Raise the Minimum Wage to Reduce Inequality, Stimulate Spending
Left-leaning politicians and pundits have strived to move economic inequality to the front burner in 2013. In 2014, they hope to spark action to raise the Federal minimum wage, which was last increased on July 24, 2009.
Advocates and opponents of an increase have lined up to battle over the economic and moral implications of this perennial issue.
James Sherk, a senior policy analyst at The Heritage Foundation in Washington, says an increase in the minimum would hurt the economy and the people it is intended to help.
"The Obamacare employer mandate will raise minimum hiring costs of full-time workers to $10.30 per hour. Adding a minimum wage hike would raise that to $12.71 per hour. Employers would respond by eliminating jobs and cutting hours, making it harder for unskilled workers to obtain entry-level jobs and gain experience."
A February 2013 proposal by President Obama to raise the minimum wage to $9 per hour from its current $7.25 would restore the wage’s inflation-adjusted value to a level it held during President Ronald Reagan’s first term. Obama has more recently supported an increase in the minimum to $10.10.
Extend Unemployment Payments; They Will Boost the Economy
The argument has persisted since unemployment insurance programs began late in the Great Depression: Do jobless benefits tide over deserving families caught up in a poor economy, or are they a crutch for job seekers who should be trying harder?
Here’s what Chad Stone, chief economist at the Washington-based Center on Budget and Policy Priorities, had to say about providing Federal funds for Americans who have exhausted their regular state jobless benefits:
“Emergency unemployment insurance benefits help jobless workers maintain spending on family necessities as they look for a new job in a tough job market. The increased sales generated by unemployment payments boost economic growth and job creation. That’s good for employers and other workers. Emergency unemployment payments should be renewed.”
As of November 2013, there were 4.1 million Americans who had been unemployed for more than half a year.