Four Ways to Jump Start the Economy
October 29, 2013
The nation’s economy showed disappointing growth in September, with only 148,000 jobs compared to 169,000 jobs created in August.
Despite 42 straight months of job growth, the rate of recovery remains sluggish and is ineffective in making a dent in the still-high jobs deficit.
While Congress should have been focused on job creation, it wasted the last couple months refighting Obamacare, bringing the government to a halt, a move that cost taxpayers billions in wasted federal dollars.
So what can Washington, D.C., and local leaders do to encourage an economic recovery that can benefit all Americans?
Here are some suggestions from the experts.
We Need a Raise
Despite record gains in productivity, the average workers’ wages continues to decline. Low wages are not just bad for individual workers – they are a drag on the economy as a whole.
As the National Employment Law Project wrote in a 2011 report:
Consumer spending is the engine that powers our domestic economy, comprising 70 percent of gross domestic product. Restoring consumer demand is essential for stabilizing the economy and allowing local businesses to expand and create jobs.
Raising wages for low and moderate income workers is one of the most effective strategies for boosting demand. Unlike higher earners who can afford to save some of their income, working families spend higher wages on necessities at local businesses, re-circulating them back through the economy.
The numbers back this up. The Federal Reserve Bank of Chicago estimates that every $1 in wage increase for a minimum wage worker results in $3,500 in new consumer spending. The Economic Policy Institute estimates that the 2009 increase in the minimum wage generated $5.5 billion in consumer spending alone.
Raising the minimum wage and supporting living wage and prevailing wage laws contributes to economic growth and good jobs.
Invest in America
America’s infrastructure is reaching the end of its natural life and needs new investment badly.
Infrastructure expert Scott Thompson wrote for the Council of Foreign Relations:
The United States has huge unpaid bills coming due for its infrastructure. A generation of investments in world-class infrastructure in the mid-twentieth century is now reaching the end of its useful life. Cost estimates for modernizing run as high as $2.3 trillion or more over the next decade for transportation, energy and water infrastructure. Yet public infrastructure investment, at 2.4 percent of GDP, is half what it was 50 years ago.
Not only is investing in infrastructure vital to economic growth – it means jobs.
As IBEW President Edwin Hill and Pacific Gas and Electric Chief Executive Tony Early wrote in Politico last March:
These investments can put tens of thousands of Americans back to work. One analysis estimates that modernizing and upgrading the electric transmission system alone could create an additional 150,000 to 200,000 jobs every year over the next two decades. Investments Pacific Gas and Electric plans to make in the next several years in California are expected to support as many as 30,000 jobs. Moreover, this work is laying the foundation for future growth in a world where affordable, reliable and clean energy is only going to become more vital if America intends to stay competitive.
Don’t Cut Retirement Benefits
It’s fashionable for leaders of both parties to talk about slashing entitlement programs. Even President Obama has voiced support for a “chained CPI” which would reduce monthly Social Security payments for millions of retirees.
Cutting these programs would not only have a minimal effect on the national debt, but would hurt middle-income Americans who are vital to future economic growth.
AS EPI researchers Josh Bivens and Hilary Wething wrote:
Social Security, Medicare, and Medicaid have been extraordinarily important in raising middle-class incomes over the past generation, accounting for half of total income growth for the broad middle class between 1979 and 2007.
Buy Made in America
Outsourcing has decimated U.S. manufacturing, costing millions of good jobs. Much of that is the result of bad trade deals and Chinese currency manipulation. But according to the Million Jobs Project, if we all buy just 5 percent more U.S. made products; we will create a million new jobs here at home. Check it out.