Rutgers public policy professor Carl Van Horn says the way to move the job situation beyond stall is to invest in infrastructure.
Van Horn, who heads the John J. Heldrich Center for Workforce Development at Rutgers University in New Brunswick, studies longterm unemployment, which is why I asked him to be one of my Sunday panel of experts in addressing the economy's stubborn refusal to create enough jobs to move the needle on unemployment. I didn't have room for everything that he said in the newspaper, so I'm running his remarks here.
Is this the new normal?
It is difficult to predict, however, the current slow growth, high unemployment, slow or no wage growth economy is likely to plague the U.S. economy for several years. Today, 14 million people are officially unemployed--millions more are underemployed -- and there are approximately four jobseekers for every job opening. The labor force expands by about 1,500,000 each year. Older workers are less likely to voluntarily retire than they were 5 years ago because the value of their homes has declined and their retirement savings have been decimated. Therefore, absent a robust and sustained period of expansion at 3% or more in the Gross Domestic Product, it will take many years to get back to the level of unemployment we experienced in 2007. Unfortunately, the economic recovery will continue to be slow and painful for millions of American workers.
What would it take to encourage hiring?
There are several strategies that Congress and the President could undertake take to stimulate growth and ease the plight of the long-term unemployed--in the unlikely event that policy makers reach a consensus. At the top of my list would be increasing investments in infrastructure--roads, bridges, highways, airports, and train corridors--and in basic and applied research in health and renewable energy. These types of government spending programs not only provide jobs now, but also make the economy more productive for decades. Although most of the nation's unemployment is caused weak economic growth, millions of jobs are not filled because of the lack of trained workers in some occupations. Increasing spending on long-term training programs to help unemployed workers transition to new careers would help millions get back to work and avoid personal financial ruin. Finally, government programs that provide partial, temporary wage subsidies to employers that retain and retrain workers--on-the job training--is a proven strategy that would help employers and employees alike.
The volatility and direction of US government policy has reinforced fears in the marketplace and eroded consumer confidence. Policies designed to reduce or restrain federal and state budgets mean that significant new stimulus via spending or tax reductions may not be approved in Washington, D.C. until the first quarter of 2013--after the national elections for President and Congress. Private employers and investors may sit on the sidelines delaying investments in new plant and equipment--and the expansion of their workforce--while they await more clarity about the direction of government policy.
Wednesday: Cheryl Spaulding -- head of a 11-church support group network for the unemployed