The Jobs Dilemma

Looking for a longer view.

President Obama's final push to secure health care reform legislation in March was something of a distraction, he admitted, from the most pressing issue: "jobs, jobs, jobs."

So he also was encouraging Congress to produce another "jobs" bill-no longer called by the out-of-favor name of "stimulus." The $150 billion measure would add to the nation's debt, prompting the Committee for a Responsible Federal Budget to demand the final bill use so-called pay-as-you-go principles to offset the new spending. Increasing worries about loading more debt on our children and grandchildren might constrain government's willingness to continue expensive recovery efforts, as the March 3 statement by the committee-of distinguished federal budget experts-suggested.

Private economists estimate the stimulus program has saved or created up to 2 million jobs, and many think this was essential to avoiding a deeper economic downturn. But the stimulus must be viewed principally as a short-term fix, not as a solution to the longer-term structural problems our economy faces. By all accounts, unemployment will remain high after stimulus spending ends. So the question becomes: What should government do next?

The sustainability of stimulus jobs appears especially problematic in the public sector. The Web site Recovery.gov, which tracks jobs attributed to the stimulus program, has no estimate of how many are public. But the 2010 Economic Report of the President credits the program with supporting at least 325,000 education jobs through the third quarter of 2009. Nearly all of these would be on state or local government payrolls-along with tens of thousands of others in police, fire and other occupations. State and local budgets are in miserable shape, so these jobs are certainly in jeopardy as stimulus winds down. And, of course, the answer to our employment challenge does not lie in the public sector-which will shrink further if it can't generate more revenue from a healthier private sector.

The longer-range challenge American workers face is brilliantly described in The Atlantic's March cover story titled "How a New Jobless Era Will Transform America." Journalist Don Peck notes that unemployment and underemployment (which includes involuntary part-timers and discouraged job seekers) has climbed above 17 percent, and many people are suffering chronic unemployment- "a pestilence that slowly eats away at people, families, and, if it spreads widely enough, the fabric of society." Recovery will be retarded, he says, by such trends as accelerated outsourcing and slowing business innovation.

Peck writes with concern about prospects for the young millennial generation, conditioned to expect great things but not, perhaps, to independent entrepreneurship in the face of adversity. He laments too the "mancession" this downturn has created: men have suffered about three-quarters of the 8 million job losses since the beginning of 2008, affecting their families with their own "tarnished identity and loss of self-worth."

So, again, what can government do? Looking ahead, social and economic analyst Richard Florida sees a society of diminished material expectations, but greater social coherence facilitated by government action. In his new book, The Great Reset (HarperCollins 2010), Florida suggests new, perhaps improved, lifestyles will emerge if government at all levels promotes more density and mobility within major metropolitan regions. Like others, including President Obama, Florida believes the country needs to develop more knowledge, professional and creative jobs-and, he argues, systems to encourage innovation and productivity, portability of benefits and better pay in our huge service sector. Education, research and infrastructure investments, and other public policies will play an important role in shaping this new future. But the genius of the private sector will have to be our greatest hope for salvation.