How to Create More U.S. Jobs

With dismal unemployment numbers and the realization that the U.S economic recovery is not producing jobs, the U.S should look to Germany as a model of how to produce and save jobs.

The German government last week announced quarter-on-quarter economic growth of 2.2 percent, Germany’s best performance since reunification 20 years ago — and equivalent to a nearly 9 percent annual rate growth.
Economists agree that most of the growth resulted from increased exports.

The Economist Magazine recently reported that unemployment in Germany is actually lower now than before the recession. The official German national unemployment rate is 7.6% but might in fact be much lower than the U.S because the U.S doesn’t count discouraged workers and people not actively looking for work.

What have the Germans done to save and create jobs? Here are some quotes from a recent NY Times article entitled, Defying Others, Germany Finds Economic Success by Nicholas Kulish:

“A vast expansion of a program paying to keep workers employed, rather than dealing with them once they lost their jobs, was the most direct step taken in the heat of the crisis. By paring unemployment benefits, easing rules for hiring and firing, and management and labor’s working together to keep a lid on wages, Germany ensured that it could again export its way to growth with competitive, nimble companies producing the cars and machine tools the world’s economies — emerging and developed alike — demanded.”

"At its peak in May 2009, roughly 1.5 million workers were enrolled in the program. The Organization for Economic Cooperation and Development recently estimated that by the third quarter of 2009, more than 200,000 jobs may have been saved as a result.”

In other words, the Germans realized that it’s better to keep workers employed than to pay them unemployment benefits. The U.S approach was to give unemployed workers 92 weeks of unemployment benefits. That appears short sighted, in comparison. While unemployment benefits create an immediate stimulus to the economy it’s better to have people actually producing something.

The German economy is focused on exports rather than consumption like the U.S. There's a lot of talk from Congress and the administration about increasing exports but we haven't the policies in place to even begin to increase exports. And the U.S trade deficit is getting worse by the minute. Here are some policies that will help:

I'm recommending the U.S initiate an industrial policy. I have written a few articles here at Benzinga advocating an industrial policy. (See links to previous articles)

http://www.benzinga.com/life/politics/10/08/419123/the-economist-magazin...

Here's what I'm advocating:

1) Public/ private partnerships that will pour money into research and development into promising high growth areas that can create high paying jobs.

The U.S government needs to seriously study what industries we need to target in order to remain competitive. Some jobs and industries that we’ve lost due to out-sourcing, are lost forever, and pouring more money and resources into them will be a waste. Then the U.S needs to create public / private partnerships, and foster research and development into promising areas.

2) The U.S needs to focus on how our trade agreements are hurting us and what we can do about it.

Too often when the U.S. goes to the bargaining table with our foreign trading partners we have no greater goals other than creating more free trade. That’s why our Asian trading partners are clobbering us at the bargaining table. See the following example of South Korean auto policies:

http://www.benzinga.com/life/politics/10/08/419123/the-economist-magazin...

These suggestions are long term solutions. We’re probably stuck with high unemployment for the short term. For sure, we’re not going to copy Germany verbatim. Any solution will have to be a hybrid.

In addition, there are other solutions that the Obama Administration is currently working on like giving businesses tax credits for creating jobs. But, whatever benefits we’ve gotten from the stimulus haven’t resulted in a notable increase in employment.

The Obama administration needs to make some changes or high unemployment will become a permanent fixture in the U.S. What else won’t work? Renewing tax breaks for people making over $200,000 a year, that are not specifically earmarked towards job creation, hasn’t worked in the past, and won’t create trickle down jobs in the future.