The Inclusive Economy
Recap: Big Ideas for Job Creation
A few days ago, the two of us attended a forum in Washington titled “Big Ideas for Job Creation.” Hosted by the University of California-Berkeley and the Hatcher Group, and funded by the Annie E. Casey and Kellogg Foundations, the forum focused on ideas for job creation at the federal, state and local levels.
The forum featured five panelists and their “big ideas.” Bob Friedman, CFED’s founder and chair, was one of these panelists. Bob spoke about Bill Schweke’s paper that presented the big idea of leveraging the tax moment to promote entrepreneurship by making free tax assistance available to entrepreneurs, minimizing the tax burdens on self-employed business owners and encouraging the savings that enables businesses to start up and grow.
Karen Chapple (University of California, Berkeley) introduced the conversation, saying that “this is a conference about impatience.” The U.S. would need to create 1.5 million jobs a year just to keep up with population growth, not to mention the millions more needed to battle unemployment caused by the current economic challenges. We’re all tired of political paralysis at the federal level, and because of this, state and local governments need to come up with creative ways to promote job creation.
Steve Savner (Center for Community Change) gave opening remarks, explaining that the Center for Community Change has traditionally focused on access to and quality of jobs – but not creating new jobs. It’s difficult to create jobs in this economic and political climate, given the high unemployment and intense gridlock in Washington. However, there is a fundamental question to be answered: what is the role of government (federal, state and local) in creating jobs.
Kate Gordon (Center for American Progress) moderated the panel.
Presenters and ideas included:
- David Neumark (Professor of Economics, University of California, Irvine)
Big Idea: Revamping hiring credits so they are broadly defined, temporary and automatically triggered when the economy goes into recession
More: People on both sides of the aisle get the logic of hiring credits; the issue is how to design the credits. Neumark said that we should focus on the unemployed broadly, rather than targeting the credit at a narrow group of people. This minimizes administrative costs (no need to spend lots of time verifying eligibility) and reduces stigmatization (employers not reluctant to hire workers with the credit because they are perceived as undesirable). One potential issue is the “windfall rate” – 9 out of 10 employers that take advantage of the credit would have created the job anyway. Despite this high windfall rate, it still may be cheaper than other ideas.
- Elizabeth Lower-Basch (Senior Policy Analyst, Center for Law and Social Policy)
Big Idea: Providing direct subsidies to employers at the state level to encourage employers to hire disadvantaged workers
More: Basch emphasized that this idea is about making sure that the most disadvantaged workers get jobs. The subsidized jobs program would directly subsidize employers for some or all of the wages. The key is to make sure that the subsidies are changing employers’ behaviors and to make sure that the right jobs are matched with the right workers.
- Bob Friedman (Founder and Chair, CFED)
Big Idea: Leveraging the federal tax code – and eliminating penalties for self-employment and new business – to propel entrepreneurs to create new jobs
More: Bob highlighted three tasks that we need to focus on: (1) recognizing where jobs come from (new small businesses), (2) using the tax system to reach entrepreneurs (“we need to welcome them, not scare them away”), and (3) helping families rebuild savings, since many new small businesses are financed from savings and not loans. These are all strategies that CFED and the Self-Employment Tax Initiative (SETI) have employed to encourage and provide support for self-employed business owners. As Bob said, “It’s really about people and acknowledging their capacity to create their own employment.”
- Nathanael Hoelzel (Ph.D. Candidate, Georgia Institute of Technology)
Big Idea: Collecting waste from businesses and residences for reuse, recycling and remanufacturing to create economic activity and local jobs
More: Rather than throwing it away, waste material can be treated as a locally produced resource and used to create new, local jobs. Recycling activity can create over 10 times more jobs than disposal in landfills. Most of these jobs are higher quality jobs than landfill jobs.
- Joel Rogers (Professor, University of Wisconsin – Madison)
Big Idea: Strengthen the capacity of local governments and institutions so they can facilitate and leverage private capital for physical infrastructure projects across the country
More: Much of America’s physical infrastructure is in poor condition or obsolete. Rogers emphasized that infrastructure is a shared asset – something we all benefit from. The idea is to use private capital for infrastructure projects, under public guidance and performance terms. Since the bulk of the money would come from private dollars, the cost to the public would be relatively minimal.
Overall, the event was lively and full of great discussion. The big idea that Bob presented was the only one proposed that focused on job creation through business creation and highlighted the central role of entrepreneurs in net job growth each year, so the audience had lots of questions after his presentation. Bob reiterated that perhaps one of the most important and impactful ways to promote job creation through entrepreneurship is simply to send the right “signal” to those who recognize either the opportunity or necessity to create their own jobs through self-employment. By acknowledging the incredible volume of job creation for which these business owners are already responsible, we recognize their capacity—which is too often ignored—and encourage their success.
To learn more about CFED’s support of the self-employed and small business owners, visit us online.