Ten Ways to Create Jobs and Put America Back to Work as Unemployment Rate Drops to 10%

It's what economists calls the "multiplier" or "respending" effect, Shierholz said.

Target Aid to States

Under the Obama administration's stimulus package, states received some $50 billion to ward off layoffs, mainly at schools. But even with that aid, some states are still having trouble making ends meet this year, and Faucher worries about what will happen next year.

He and others argue that states -- which unlike the federal government, can't go into debt to balance their budgets -- should receive more money to tide them through their fiscal hardships.

"State and local governments are required to balance their budgets. If they have big budget deficits, they need to lay people off," Faucher said. "If someone who would have been laid off keeps his or her job, that's just as good as adding the new job."

Increase Relief for Small Businesses

Experts agree that small businesses are a major driver of jobs growth in the U.S., but with many small businesses still struggling to obtain loans from banks, some argue that the government should be doing more to increase credit to small businesses beyond recent measures to make more TARP money available to community banks.

Cheryl Carleton, a labor economist and a professor at the Villanova School of Business, said the government should make loans directly to businesses, or the Federal Reserve should pressure banks to be less risk-averse when it comes to deciding whether to grant loans to small businesses.

"The Fed has to use its clout," Carleton said.

Faucher said the government could expand the Small Business Administration's loan guarantee program – which insures 90 percent of a bank's loan to a small business – to a guarantee rate of 95 percent. Those extra five percentage points, Faucher said, can make a difference.

"Given how tight credit is, and how reluctant banks are to lend, I think it could help," he said.

Tie Tax Credits to Hiring

How do you convince a business to expand its payrolls? How about offering them a tax credit for each new hire? It's an idea making the rounds now, and it's got the support of EPI's Shierholz.

"It's a really smart way to do business tax credits," she said.

She conceded that some credits will go toward businesses that would have hired new employees even without the tax incentive. But given the current unemployment situation, she said, it's still worth it.

"It really is time to take big, bold action," she said.

Tackle Health Care

Carleton won't play favorites when it comes to the various versions of health care reform churning through Capitol Hill. But when it comes to job creation, she said any health care reform package must do at least one thing: lower health care costs for businesses, particularly small businesses who don't qualify for reduced rates available to larger companies.

Carleton said that health care costs are a major reason companies may opt to have employees work overtime instead of making new hires to take on extra work.

"If you want them to hire more workers," she said, "you have to reduce the cost of hiring new workers."

Do Nothing

"The government needs to accept the simple reality that it can't create jobs," pointed out former Minnesota Gov. Jesse Ventura. "What it can do is make things easier for the private sector and business community to do what they need to do – this is the only source of job creation that we can count on. Get out of the way and let businessmen lead."

Addressing job growth concerns in the U.S. is simply a matter of time and patience, some say. "What little the government can do in the short term, it has already done," New York University economics professor Roy Smith said. "The government needs to be respectful of its own limitations."


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