Dueling Job Creation Plans From Labor, Business

Sept. 5, 2011 -- In anticipation of the president's speech on job creation, big business and big labor are weighing in with their own prescriptions for putting millions of unemployed Americans back to work. What solutions are they backing and can they agree on any? And to what extent do these plans overlap with the one the president is expected to unveil when he speaks this Thursday?

Obama's speech comes on the heels of a bleak jobs report, released Friday, which found no net gain in new jobs for August. Some 14 million Americans remain out of work. Of those, almost half have been out of work six months or longer. The jobless rate is forecast to remain at around 9 percent through the end of 2012.

Tom Donohue, president of the U.S. Chamber of Commerce, and Richard Trumka, president of the AFL-CIO, are offering their own plans for creating jobs. Both men last week described the steps they believe would produce job growth.

Donohue, in a preview of a more detailed plan the U.S. Chamber will submit this week to the White House, advocates investing in U.S. infrastructure--building or repairing schools, ports, roads, bridges, railroads, airports. Such projects, he says, would "put idle construction workers back to work." The Chamber also advocates investing in domestic energy production; cutting red tape and removing regulatory barriers; and approving pending free-trade agreements with South Korea, Panama and Columbia--which, the Chamber says, would save 380,000 existing jobs and create thousands of new ones.

Trumka, president of the AFL-CIO, endorses infrastructure projects. He also wants the federal government to create jobs directly, though a program like the New Deal's WPA. To boost consumer demand he'd increase consumer confidence by extending unemployment benefits and by providing mortgage relief to homeowners worried that they'll lose their homes. In addition, the AFL-CIO advocates a "speculation tax" that would force Wall Street "to pay to rebuild the economy it helped destroy."

What will President Obama recommend? No one knows for sure, but he's already said he favors infrastructure projects and advocates creation of an infrastructure bank to help fund them. He's said he wants to extend payroll-tax cuts: In December, Congress and the White House agreed to a 1-year cut in the amount of money employees have to pay in Social Security taxes. That cut put an estimated $1,000 in the pocket of the average family.

He'll likely commit, say White House watchers, to a further extension of jobless benefits. He may recommend one or more programs that would give employers new incentives to hire--especially to hire the long-term unemployed. These programs might offer subsidies, tax credits, or both to participating employers.

Are infrastructure projects, then, the only big thing the White House, labor and business can agree on?

"Yes, that's fair to say," says Damon Silvers, policy director for the AFL-CIO."That's why you see both presidents Trumka and Donohue speaking jointly on this subject. We all agree on that one." On all the details? "Maybe not. But in principle."

All three parties agree on the need to reauthorize the surface transportation act, before it expires at the end of this month. Reauthorization of the highway trust fund would be the easiest and fastest way to get money flowing to construction and repair projects. According to some estimates, the move would create 120,000 jobs a year over the next three years, and would prevent the furloughing of current highway workers.

Obama and the Chamber advocate creating an infrastructure bank, which would combine public and private funds, to help fund big construction projects. Silvers says that while a bank is a good idea, "It's just a smaller-bore thing than the highway bill." The AFL-CEO, he says, has no problem with a bank in principle, but would want protections to ensure it didn't over-enrich the private investors who put money into it. The Chamber, he notes,"has member banks who would benefit."

Aren't there any other big steps that business and labor can agree on? Not really. But they agree on some smaller ones.

The Chamber suggests encouraging more foreigners to visit the U.S. and spend money here, saying tourism is already a $700 billion industry providing 7.4 million U.S. jobs. An AFL spokesman dismisses this suggestion as "just silly" and says the jobs created are of low quality. "Still," he says, "we would not oppose it."

Likewise, a spokesman for the U.S. Chamber doesn't dismiss the possibility the Chamber might support some government program that gave employers subsidies or tax breaks to hire the long-term unemployed. "But," he says, "we'd have to see the specific legislation before taking a position."

On other points, big business and big labor are diametrically opposed--for example, their positions on how to help the housing industry.

The AFL's view is that providing mortgage relief for homeowners facing foreclosure would boost consumer confidence, thus boost spending and create jobs. "Congress and the administration should provide for mandatory reduction of principal for homeowners facing foreclosure," says the AFL-CIO's position statement.

And the Chamber's position?

"Government," says Donohue, "should avoid the temptation to endlessly prop up those who sadly will never be able to afford the homes they are in now."

"We must face the reality that there will not be lasting improvement in the housing market until the backlog of foreclosures is cleared and the existing inventory reduced," he says. "Our policy makers should let the market take its corrective course. The sooner that happens, the faster this key sector will recover and start building and hiring once again."