Want to Jolt U.S. Jobs? Look Beyond Our Borders

Want to Jolt U.S. Jobs? Look Beyond Our Borders

Why you should care

Stifle that yawn — Friday’s monthly U.S. jobs numbers should get you thinking about how other countries keep their workers working.

This Friday the Bureau of Labor Statistics is supposed to release September jobs numbers, although whether that actually happens or not in light of the federal government shutdown is unclear. In a way, it doesn’t really matter. Last month the national jobless rate hit a four-and-a-half year low but with an anemic 169,000 jobs added. The forecast for September is more of the same – 180,000 new jobs are expected.

It’s frustrating that the month-on-month jobs numbers continue to be so, well, so-so, especially as other areas of the economy are heating up. U.S. stocks are trading at record highs after the Fed’s September 17 announcement that it’ll continue its stimulus program, for instance. Why can’t we jolt the jobs situation like this?

Of course, economic indicators can be devilishly tricky, especially when it comes to jobs. When a job is created, it can be nearly impossible — despite politicians’ assurances— to determine which people or policies deserve credit.

U.S. stocks are at record highs after the Fed announced its stimulus program would continue. Why can’t we jolt the jobs situation like this?

But this stuff is crucial: Unemployment is a huge factor in determining the stability of nations and economies. In the Middle East, youth unemployment hovering around 25 percent helped flame the various Arab Spring upheavals. A World Bank survey in 2011 reported that up to 40 percent of rebel militants say they were motivated by a lack of good jobs.

In recent years economists have focused on the skills mismatch, in which businesses can’t find qualified workers among the unemployed, but the International Monetary Fund’s latest findings suggest that the most reliable way to create jobs is simply to increase output. Then a phenomenon known as Okun’s Law kicks in: For every 2 percent of growth, you get about a 1 percent decrease in unemployment.

So what’s the world’s No. 1 economy to do? OZY wouldn’t be OZY if we didn’t try to broaden your horizons with ideas from around the world.

Workers in the production of BMWS at their plant in Germany.

Source Armin Wiegel/Corbis

How Germany Remains Stable

In a troubled Europe, economic stalwart Germany has remained strong on jobs by taking sometimes painful steps to make its labor market more flexible, making it easier for businesses to add jobs and to reduce hours rather than force layoffs at tough moments. Germany’s focus on high-quality, high-margin manufacturing (think BMW and Bayer) has kept the country competitive with China. More than that, a relatively high proportion of family-owned firms has provided noneconomic incentives to keep operations — and jobs — within the country’s borders.

Scotland Under Construction

In the U.K., Scotland has proven surprisingly strong in job growth, second only to urban London in terms of jobs added between 2010 and 2013. There, First Minister Alex Salmond spurred construction by accelerating capital spending, using $526 million to draw in $4.05 billion of private money for building and infrastructure projects.

The Secret Down Under

Australia, meanwhile, just celebrated its 22nd consecutive year of economic growth — a stat that’s crazy-unprecedented for a modern developed country. Its secret? It certainly helps to have the world’s largest recoverable deposits of lead, silver, nickel, zinc and uranium, and the second-largest stores of iron ore, copper and gold. But good governance and smart investing in education have helped keep the boom booming. Indeed, though productivity growth has flagged a little in recent years, it may simply be because so much of the workforce is already employed, meaning new jobs have to go to less-qualified workers. It’s also really easy to start new businesses there — a must for job creation at the grass roots.

Ideas to Steal

So, how does any of this apply to the U.S.?

  1. More B corporations. First, we should make it possible for more businesses to look beyond the short-term bottom line in their business planning. Germany’s numerous family-owned corporations do this by nature, but many of the rest are majority-owned by foundations that can include goals beyond return on investment in their strategies — like social contributions, or simply keeping jobs in-country. Currently 14 states and the District of Columbia allow for the creation of so-called B corporations, for-profit companies that can consider social and environmental benefits along with the bottom line. By encouraging wider adoption of the B corp option, the U.S. can help ensure that fewer companies are forced to take jobs offshore.

  2. Help young business flourish. Next, we should make it even easier for young businesses to start up and succeed. According to the World Bank, it’s currently easier to start a business in Rwanda or Belarus than in the United States. New Zealand currently leads the pack in ease of starting a business. The Kiwis currently outpace us with lower corporate taxes and a simpler regulatory framework.
Man working at the sewing machine in Huye, Rwanda.

Source Rick D’Elia/Corbis

The road to making taxes and regulations simpler and fairer is long and, unfortunately, runs right through Congress. But the good news is that it’s getting easier for startups, and not just the tech kind, to succeed. Platforms from Etsy (itself a B corp) to Kickstarter make it easy to get new ideas off the ground, and as the provisions of the JOBS act come on line, small companies will be able to raise funds from nontraditional investors and a crowdsourcing-style platform. This will shorten the distance between a great idea and an up-and-running business that’s here to stay — and is hiring. Two years ago, former President Clinton recommended providing cash for startups in an article about the jobs crisis, and this is exactly the kind of thing governement should do.

Of course, the first rule of job creation is to do no harm. With 800,000 workers furloughed as a result of the present shutdown, at a cost of $1 billion per week to the U.S economy, the first thing that the U.S. government has to do before embarking on any meaningful jobs push is to get its own house (or House) in order. Creating jobs is hard enough without pouring salt into your own economic wounds.

Comment

Topics:

OZYPOV

Interviews, op-eds, and analysis to help you make sense of the news of the day and the news of the future.