Dean Baker released the following statement regarding President Obama's upcoming job summit:
"It is encouraging to see the Obama administration return its focus to
job creation. The stimulus bill passed last February was an important
factor in stopping the steepest economic downturn since the Great
Depression. The latest report from the Congressional Budget Office
indicates that the ARRA of 2009 may have been responsible for creating
as many as 1.6 million jobs, lowering the unemployment rate by as much
as a full percentage point."
"Nonetheless, the downturn has been markedly worse than was predicted
last winter. The unemployment rate is at an unacceptably high level and
is now projected to remain high long into the future, remaining in
double digits for most of 2010, and not falling below 7.0 percent until
late 2012. President Obama has rightly decided that this baseline is
unacceptable."
"There are four steps that can be taken to reduce the unemployment rate quickly:
1. Flexible employment credits to allow employers to shorten work
hours instead of laying off workers: Each month, employers are laying
off close to 2 million workers. If the government gave employers tax
credits to shorten work time while leaving pay unchanged, it could
reduce these layoffs. If the number of layoffs fell by just 10 percent,
this would have the same effect on employment as adding 200,000 jobs a
month or 2.5 million a year. Germany has used this mechanism to keep
its unemployment rate from rising, even though it has experienced a
steeper recession than the United States.
2. Support for education, health care and other vital state and
local government services: Under budget pressure, state and local
governments across the country are cutting these services and laying
off workers. Aid from the federal government can allow these workers to
keep their jobs and services to continue to be provided.
3. Direct job creation: There are parts of the country where the
unemployment rate now exceeds 25 percent, with youth unemployment well
above 40 percent. To prevent a generation of young people from being
locked out of the job market, it is important to have public service
jobs that can employ people immediately.
4. Right to rent for homeowners facing foreclosure: If homeowners
facing foreclosure had the right to remain in their homes as tenants
paying the market rent for a substantial period (5-10 years), it would
provide substantial housing security to millions of families while
stemming the nation's rising number of foreclosures. This policy could
also provide an economic boost since it would free up money for
millions of homeowners who are now struggling with mortgage debts that
they cannot pay. This would in turn lead to a boost in consumption that
would increase demand in the economy."
"These steps would go far in reducing layoffs, fostering job growth and
giving relief to the millions of Americans suffering as a result of the
economic crisis."
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