Economists and other experts outline how to create jobs
— -- More than two years after the Great Recession ended, some 14 million Americans are out of work, nearly half of them for six months or longer.
What's worse, this bleak picture shows no signs of brightening soon. Economic growth is expected to plod along at a lackluster 2.5% pace next year, leaving the jobless rate hovering just below 9% by the end of 2012.
And so for the second time since early 2009, the government is looking to jump-start a job market caught between tight-fisted consumers and wary businesses. President Obama on Thursday is expected to propose more government spending on construction projects, aid to budget-strapped states and new tax credits to encourage hiring, among other strategies.
Republicans have signaled they're firmly opposed to another large economic stimulus that adds to the $1.3 trillion deficit. They prefer less-costly steps to promote job growth long term, such as cutting the corporate tax rate and streamlining regulations.
USA TODAY decided to look past the partisan crossfire and ask more than a dozen think tanks, economists, industry groups and lawmakers a simple question: What can Washington do to get America back to work again?
Repair roads, bridges, schools
Fixing the nation's aging infrastructure would create jobs more quickly than tax cuts — in as little as a few months — and meet critical needs that must be addressed eventually. Transportation bottlenecks are costing the country about $200 billion a year, or 1.6% of economic output, according to a study by a bipartisan coalition of state and local politicians. It would take $2.2 trillion over the next five years to upgrade the USA's roads, highways, seaports, rail lines and bridges, the American Society of Civil Engineers estimates.
With yields on 10-year Treasury bonds at about 2%, borrowing costs for the U.S. government are as low as they've ever been. "There's never been a more opportune time to invest in infrastructure," says Andrew Fieldhouse, policy analyst for the liberal Economic Policy Institute (EPI).
To make a tangible impact, Congress could go big, spending $200 billion each of the next two years. Fieldhouse says that would create more than 2 million jobs and reduce unemployment about 0.8 percentage points. While that may seem ambitious in an era of fiscal austerity, each dollar spent generates $1.44 in economic output, according to EPI and Moody's Analytics. As a result, about half the money would come back to the government through increased tax revenue. Some funds also could be used to build out a smart electric grid, bring broadband to rural areas and upgrade water systems.
Political and budget realities, of course, may mean shrinking grand visions. A growing chorus of economists are calling for a more targeted plan to upgrade the nation's schools with projects such as fixing up playgrounds, removing mold and installing solar panels. Unlike highway or rail improvements that take months to launch, cash could be funneled to states and school districts within 30 days through existing funding formulas, and much of the work could be done in the winter. And since the projects are more labor-intensive, they would largely pay for salaries rather than heavy capital equipment.
