5 creative ideas to stimulate job growth

Matt K. Lewis Senior Contributor
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Aside from the always quotable Newt Gingrich, if you ask a conservative how to fix the economy, you’re likely to get a response that goes something like this: “Cut taxes, lower regulations, repeal Obamacare, and encourage domestic energy production.”

These are all positive proposals, but (by now) they’re also boring. This may be an inherent challenge for conservatism. In any event, at least one conservative-leaning scholar is suggesting that government can play an active, if limited, role in finding creative solutions to address the jobs crisis.

With another gloomy jobs report out today, I thought it might be time to revisit some recent ideas put forth by AEI scholar Michael R. Strain in NRO. As economists and scholars are generally not good at listicles (rap music being an obvious exception) I have excerpted (and simplified) some of Strain’s most interesting ideas below:

1. Work sharing. “If a firm wants to cut its wage costs by 20 percent, it can fire one-fifth of its workers, or it can tell all its workers to stay home on Fridays without pay. In the latter case, under an option called work-sharing that is available in many places but remains little used, workers would be eligible to receive one-fifth of their unemployment-insurance (UI) benefit.”

Why it helps people: Strain explains that “work-sharing would amount to a pay cut (in this case, one of around 10 percent), but workers would stay employed and retain their benefits.”

What does the company get out of it? According to Strain, this “allows firms to weather a lull in demand without losing the firm-specific expertise present in their existing work forces; it spares firms the time and expense of hiring and training new workers when demand picks back up; and it prevents workers from losing or failing to acquire skills during a period of unemployment.”

2. Temporarily lowering the minimum wage for young and inexperienced workers. “This would give them the opportunity to begin a résumé, learn occupational skills (including the soft skills of professionalism, punctuality, and dealing with a boss), and build a professional network, all of which could lead to better jobs.”

3. A permanent expansion of the Earned Income Tax Credit. “This would make the public, rather than the businesses that hire people, pay for ensuring that working Americans don’t live in poverty.”

4. Relocation subsidy. “Needless to say, it would be significantly easier for many workers to get a job in North Dakota than in Nevada. But many unemployed Nevadans may lack the financial resources to pick up and move. An employment program should include a relocation subsidy to help the long-term unemployed move from high-unemployment areas to low-unemployment areas, as suggested by economist Enrico Moretti and others.” (An obvious obstacle to this would be people who are upside down on home mortgages and can’t afford to leave.)

5. Provide lump-sum bonuses to unemployed workers when they get a job. “Surprising as it may seem, there is a lot of evidence in the economics literature that little nudges like this can have large effects on people’s choices.”

Note: I don’t necessarily endorse these ideas. But I do think they deserve debate and discussion.

Matt K. Lewis