A Smart Jobs-Creation Idea Both Parties Can Love

July 22 (Bloomberg) — Where’s Franklin Roosevelt when we need him? While campaigning amid 25 percent unemployment in 1932, Roosevelt argued for what he called “bold, persistent experimentation.”

As he put it: “It is common sense to take one method and try it. If it fails, admit failure frankly and try another. But above all, try something.”

This spirit of creativity and experimentation is missing in today’s Washington, especially on jobs creation. If Republicans in Roosevelt’s time had blocked his big-spending Works Progress Administration programs, as they surely would today, he would have changed gears and experimented with something less expensive but still bold.

So should President Barack Obama. To his credit, Obama has been on the road almost every week pushing plans for jobs, from training 10,000 new engineers to creating better partnerships between community colleges and local businesses. But most of those are longer-term solutions that won’t help today’s desperate job-seekers. And there doesn’t seem to be a lot of out-of-the-box thinking from his Council on Jobs and Competitiveness.

The good news is that Obama can put people to work without spending billions if he and his team will just open themselves to more fresh ideas. I’ll offer an excellent one I heard about recently that could show quick results at a very low cost.

A Daunting Problem

But first, let’s be clear about how desperately Americans crave creative problem-solving. According to a CBS News/New York Times poll, 53 percent of Americans say jobs are the most important problem in the country. Only 7 percent name the budget deficit. Every other issue is at 2 or 3 percent.

And the scope of the problem is daunting. More than 14 million people are unemployed, and almost half of them have been out of work for more than 27 weeks. Labor Department figures released Thursday show that applications for jobless benefits increased to 418,000 in the week ended July 16, more than forecast.

I’m hoping that when the debt-ceiling crisis ginned up by Republicans finally eases, Obama will move toward an imaginative jobs agenda that can actually start to put a dent in these figures in the short term.

More likely, he’ll repeat the ideas he has already floated, like extending the payroll-tax holiday, creating an infrastructure bank or offering a job-creation tax credit of $5,000 (on average) for every net new worker hired by business.

Corrosive Fatalism

These are all good ideas but likely DOA in Congress. The last thing Republicans will agree to is spending — or even tax credits — that might help a president they despise. Sad to say, their determination to prevent Obama from being re-elected easily trumps anything serious that might help their constituents find work.

The Republicans’ tired remedies for joblessness — marginal tax cuts and regulatory relief — were tried and utterly failed during George W. Bush’s presidency, when job growth was non- existent.

And I’m afraid that a corrosive fatalism has crept into the debate. There’s only so much we can do, we’re told. The rest is beyond our control.

Compounding this problem is the mindset of many Democratic policy makers. They’re lawyers and economists trained to analyze and poke holes in arguments, not create and implement. It’s so much safer bureaucratically to say no than to risk ridicule by pitching something off-the-wall.

The business executives on Obama’s jobs council are mostly corporate types, not entrepreneurs with a buccaneering spirit. The ideas they’ve offered, like streamlining the permitting process for construction and improving the outreach of the Small Business Administration, are fine as far as they go. But they don’t go far enough.

A Bold Idea

So with more political stalemate ahead on jobs, Obama needs to experiment with some bold ideas that don’t cost much money.

Here’s one: Alan Khazei, a Democratic candidate for the U.S. Senate in Massachusetts, suggests that the federal government offer states the flexibility to convert their unemployment insurance payments from checks sent to the jobless into vouchers that can be used by companies to hire workers.

This would mean, for instance, that a position paying $40,000 might cost employers only $20,000, thereby encouraging them to hire. When the new employees get a chance to prove themselves, they’re more likely to be kept on when the voucher expires.

If a mere 10 percent of unemployed Americans persuaded employers to accept such vouchers, more than a million people would find work with no new spending beyond some administrative costs. Not too shabby.

Of course there are complications. Alan Blinder, a Princeton University economist and former vice chairman of the Federal Reserve, rightly asks, “How do you make sure the firm doesn’t fire Peter to pay Paul?”

Try Something

The answer might be to make the voucher redeemable by the employer only with a commitment to no net reduction of workers for a certain period. Such logistical concerns can be worked through if officials have the will.

But do they? When I contacted the U.S. Department of Labor, Gay Gilbert, Administrator of the Office of Unemployment Insurance, showed no interest beyond saying “There is no legal authority for states to implement the ‘voucher’ idea.”

Obtaining that legal authority from a Republican House that loves the concept of vouchers might not be so hard. But it’s only possible if policy makers are willing to consider fresh thinking.

And what if Khazei’s idea is a loser in the end? All that means is that it’s time for the government to follow Roosevelt’s advice and “admit failure frankly and try another. But above all, try something.” Fourteen million Americans looking for work deserve no less.

Jonathan Alter, the author of “The Defining Moment: FDR’s Hundred Days and the Triumph of Hope,” is a Bloomberg View columnist. The opinions expressed are his own.

Copyright Bloomberg 2011.


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