When President Barack Obama first convened his new Council on Jobs and Competitiveness earlier this year, the global economic recovery was fragile and unemployment was stubbornly high. Eight months later, with even more worrying signs from around the world, especially from Europe, and disappointing jobs figures released earlier this month, the task of the president’s Jobs Council is more important than ever.
The Jobs Council last week unveiled its interim report on recommendations to boost the competitiveness of the United States and get more Americans back to work.
The new report touches on five key areas that the Center for American Progress finds very worthwhile:
- Investing in infrastructure
- Investing in clean energy
- Making government more effective and efficient in supporting private-sector job growth
- Expanding foreign direct investment
- Addressing the job-skills gap
Each of these areas is important to the future competitiveness and broad-based prosperity of our nation. Equally important is the unity of the members of the council, comprised of leaders from labor, business, and academia, in proposing this range of solutions to help create jobs and move our country forward.
While we do not agree with all of the recommendations in the interim report—particularly tax provisions that might be used to shelter income without creating jobs—this piece focuses on the many positive prescriptions that we believe could aid in job creation. So let’s consider each area in turn.
Investing in infrastructure
The council’s recommendations on infrastructure are particularly timely. Our national infrastructure received a “D” grade on a report card issued by the American Society of Civil Engineers, and yet 1 million unemployed construction workers are waiting to get back to work while our ports and railways, roads and bridges continue to deteriorate.
The council calls for reauthorizing federal surface transportation programs instead of relying on temporary extensions. This is sensible, actionable, and should be nonpartisan. Repairing roads, bridges, and other infrastructure has the twin benefits of putting people to work in good-paying, middle-class jobs, while at the same time investing in our long-term economic competitiveness.
Importantly, the council also recommends “that Congress explore the creation of a National Infrastructure Bank.” As the Jobs Council report says, when it comes to the urgency of addressing infrastructure, “if Washington can agree on anything, it should be this — and it should be now.” Congress would do well to remember that for 14 million unemployed Americans, the clock is ticking.
There is a reason that the concept of an infrastructure bank boasts the support of the AFL-CIO, the U.S. Chamber of Commerce, and now the Council of Jobs and Competitiveness. It’s time for Congress to play its part in this practical solution to get Americans back to work.
Investing in clean energy
On energy, the council wisely calls for modernizing and expanding the national electric grid and mobilizing capital to invest in green technologies. Specifically, the members of the council called for an “independent, full-faith-and-credit-backed government financing institution to mobilize the private sector in accelerating advanced energy technologies in support of U.S. national security, environmental and competitiveness objectives.” The Center for American Progress has long supported this kind of “Green Bank” as critical to supporting the kind of advanced energy technologies that will keep America competitive and help protect the U.S. economy from the risks associated with relying on the importation of fossil fuels.
No doubt members of the council are aware of the 2.7 million jobs in the broader “clean economy,” which grew by 8.3 percent from 2008 to 2009, even in the depths of the recession. What’s more, median wages in green energy careers are 13 percent higher than the economy average.
The United States cannot afford to lose the green jobs race and the manufacturing capabilities and industrial commons that go along with them. China now outpaces the United States as the most favorable place for green investment and we need to focus on this vital sector before we are overtaken by Germany as well.
The council rightly supports President Obama’s goal of a Clean Energy Standard of producing 80 percent of our electricity from clean energy sources by 2035. Such a standard, especially one that sets aside a percentage specifically for renewable energy and efficiency, would go a long way to transitioning America to a clean energy future. The council, however, also calls for an overall energy strategy that not only includes renewable and efficient energy but also appears to treat natural gas and new oil reserves as at least an equal priority. Given that America urgently needs to accelerate its transition to a low-carbon, more sustainable energy economy, CAP believes the council’s embrace of new fossil-fuel development is problematic.
In particular, the council in its report mentions safety and environmental risks associated with new gas and oil development. One step where the council could use its unique credibility with industry would be to promote voluntary disclosure from the oil-and-gas industry of the chemicals used in hydraulic fracking, and a National Academy of Sciences review of the environmental consequences of that practice. This would highlight the best practices already being used in the industry, and provide some confidence among consumers that natural gas development is progressing safely.
Making government more effective and efficient in supporting private-sector job growth
A dynamic private sector supported by efficient and effective government is key to maintaining a competitive economy. The council rightly identifies key intersections where government processes can run more efficiently, capitalizing on the core strength of American innovation. The Center’s Science Progress online magazine has long supported patent reform, and key issues received a welcome step forward with the America Invents Act, passed just last month. More still can be done to ensure an efficacious system, and the council’s recommendation that the patent office be staffed to deal with demand is welcome, as is the suggestion that there be a team dedicated to assisting small businesses.
Indeed, when it comes to the importance of supporting small businesses, the report offers a useful reminder that some of America’s biggest entrepreneurial success stories from Apple Inc. to FedEx Corp. received support from the Small Business Administration. The council identifies opportunities for the SBA to work even better for our nation’s small businesses, including congressional action to permanently affirm and fully authorize long-term funding for Small Business Innovation Research and Small Business Technology Transfer grants—two key programs that help small, innovation-driven companies become the next Apple or FedEx.
The council suggests that SBA operate a one-stop shop to support small businesses. In thinking through how to help promising enterprises, the council may also wish to consider the ample opportunities for federal agencies to coordinate efforts to play a dynamic role in job creation. Consider, for example, the recently announced Jobs and Innovation Accelerator—a joint initiative from the Economic Development Administration, the Small Business Administration, and the Department of Labor’s Employment & Training Administration. Regional innovation clusters applied for awards from the three agencies together, providing a means of accessing different avenues of government support. So rather than navigating to many “silos of small beer” (small pots of isolated government support), these clusters were able to receive multiagency grants to accelerate their growth.
By pooling their resources, these agencies recently announced $37 million in support for 20 regional innovation clusters—from the Milwaukee Regional Water Accelerator Project to Florida’s Space Coast Clean Energy Jobs Accelerator. This small allocation of government resources is projected to launch 339 new businesses—an excellent return on investment. Now more than ever, it is critical that the federal government direct its resources to programs like the Jobs Accelerator that are doing what works.
Expanding foreign direct investment
The focus on doing what works will be critical to achieving the council’s call for a National Investment Initiative to attract $1 trillion in foreign direct investment over the next five years. At a state level, economic development agencies and governors have long seen the benefits of encouraging companies—and the jobs that they bring—to settle in the United States. At a national level, however, the Jobs Council is right that we could benefit from an increased focus on aggressively pursuing foreign direct investment.
The reality is that foreign companies can bring jobs, and on average, higher-paying ones. Daimler AG’s Mercedes-Benz unit invested $1 billion in Tuscaloosa County, Alabama, bringing 3,000 jobs to the state. And Vestas Wind Systems, the Danish energy company, recently opened its fourth manufacturing plant in Colorado, a state where it employs 1,500 people.
In an age of global capital and increasingly mobile operations, what matters most is the quality of jobs, not the location of a headquarters’ plaque. To hit this target, the federal government will have to focus on what it means to be competitive in the 21st century as we seek to grow and retain indigenous businesses while attracting an increasing share of foreign investment in a phenomenally competitive world.
For this reason, the Jobs Council may wish to consider proposals for the creation of a U.S. Department of Competitiveness, which could bring the necessary focus to the many cross-cutting areas that affect our ability to compete, such as matching workers’ skills to growing industries, ensuring our regulatory processes run efficiently, and addressing our strengths and weaknesses through a Quadrennial Competitiveness Assessment. In short, a Department of Competitiveness can make sure government agencies are focused on working together to attract this $1 trillion of new global investment.
Addressing the job-skills gap
In September of this year, the council smartly announced a private-sector initiative to graduate 10,000 more engineers. America’s workforce is the cornerstone of our competitiveness. We have the most productive workforce of any of the world’s large countries and need to ensure our skills match the needs of growing sectors. The council’s new report focuses on other key skills, too, including manufacturing and health care. Examples of education-industry partnerships like those cited by the council follow an excellent model of sector partnerships. Programs that expand these initiatives and help American workers raise their skills and retrain are critical to fostering job growth in communities around the country.
When it comes to the talent of our workforce, the council is also right to identify the economic engine of immigration as a job generator. Expanding the EB-5 visa, which offers a pathway in immigration for entrepreneurs to come to America, and improving access to global talent certainly makes sense. Unfortunately, in an attempt to avoid the politically challenging subject of immigration reform, the council did not make a broader statement about the economic benefits of a systemic overhaul of our immigration laws.
The reality is that comprehensive immigration reform could deliver an additional $1.5 trillion in cumulative GDP over 10 years. Put in more immediate terms, if Congress had tackled this critical economic issue in mid-2009, we would now have 309,000 more jobs. Entrepreneurial visas would help get more people who are already successful to our shores. Indeed, 40 percent of all Fortune 500 companies were started by people who were either foreign born or the children of those who were. Even so, it is worth realizing that had EB-5s existed in the 19th century, Andrew Carnegie would not have qualified. Which is to say that the opportunity to welcome the talents of new Americans is even greater than explicitly acknowledged in this report.
Conclusion
When the Jobs Council issued its first fact sheet this past summer, the Center for American Progress acknowledged that the members of the council offered several sensible, nonpartisan suggestions to get Americans back to work. The Jobs Council continues to offer very worthy and helpful ideas for the creation of jobs and the improvement of American competitiveness. While there will be disagreements on what the priorities should be and some measures could be more finely targeted, it is encouraging to see this group of corporate, union, and academic leaders working together to address the nation’s greatest immediate challenge: creating jobs.
Jennifer Erickson is the Director of Competitiveness and Economic Growth at the Center for American Progress.