The US has a jobs crisis. Here's how to fix it

The US economy has a problem: millions of Americans are left out.

There are at least 7m Americans who find their lives stagnating, the work they desire just out of reach. These workers get various names from economists – “discouraged workers,” “part-time for involuntary reasons” – but their ranks are still strong.

Can the US do better than this? Here’s a better question: could we do worse?

Consider: of all the unemployed people counted by the American government, more than one-third have been without even a scrap of work for 27 weeks or more. That’s 27 weeks of stress and unpaid bills.

It’s possible to work for a giant global company like Amazon and get paid so little that a homeless shelter is the only place for your family. Unemployment is a fact of life for many baby boomers into their golden years without a cushion. The price of education is still forbidding, and for those who can somehow cobble together the money through loans, the debt will be far greater than income for years.

What do we do now?

We asked a panel of experts to pick their best policy ideas for fixing the unemployment crisis in America. Democratic senator Amy Klobuchar and former Republican senator Olympia Snowe criticise the intransigence of Congress and highlight job training.

So do two respected economists, MIT professor Simon Johnson and Keystone Research labour economist Mark Price, who also advocate immigration reform and minimum wage increases.

Let’s talk.

Mark Price

Mark Price is a labour economist at the Keystone Research Center. His areas of research include income inequality, trends in employment and compensation, the construction industry, and low-wage labour markets.

You want to fix the unemployment crisis? Repeat after me: Save the planet, raise wages and make sure the kids really are alright.

In order to forestall the worst predictions of catastrophic climate change the Intergovernmental Panel on Climate Change has recommended that greenhouse gas emissions be reduced by 40% by 2035. Robert Pollin and his colleagues from the University of Massachusetts-Amherst in Green Growth layout an ambitious 20-year plan for America to do its part to meet that goal.

One component of this plan is for the country’s largest landlord, the federal government, to fully fund a programme to make public buildings more energy efficient.

With construction unemployment high the cost of construction is much cheaper now than it will be when the economy finally does fully recover.

Act now and we can put people to work, save the taxpayer money and save the planet. Easy peasy.

Another side effect of America’s unemployment crisis is falling wages which is also sapping the economy of its most important dynamo consumer spending. David Cooper of the Economic Policy Institute estimates that a minimum wage increase to $10.10 hour would boost the incomes of millions of workers while generating thousands of jobs.

You got that, Congress? Repeat after me in your best Ben Stiller impression: dooo it!

And finally we need to take care of the kids and I would focus both on the “kids” that are old enough to work as well as the ones under five.

You heard that right. It’s about time America put those layabout preschoolers to work developing their vocabularies. Timothy Bartik, in his book From Preschool to Prosperity, makes the economic case for programme that includes universal pre-K for all four-year-olds in America and access to developmental child care for all low income children from birth to age five.

Ramping up such a programme now has the potential in the short run of creating jobs and in the long run of reducing inequality.

Another group of kids that need our attention are young adults under the age of 25, a group facing startlingly high unemployment rates. Dean Baker and Jared Bernstein in Getting Back to Full Employment make the case for a national jobs programme. Establishing such a programme now for these young workers would be a great place to start.

When it comes to fixing the unemployment crisis, where there’s a will there’s way.

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Simon Johnson

Simon Johnson is a professor of entrepreneurship at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. Previously, he was the economic counsellor and director of research for the International Monetary Fund. He is the co-author with James Kwak of the book 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown.

To reduce the persistently high unemployment rate in the United States, Congress should move to relax some of our current constraints on immigration.

This is a controversial idea because many people are under the impression that allowing in more immigrants would push up unemployment. But that would only be the case if the number of jobs in the US were an unchanging constant.

In fact, some categories of immigrants tend to create jobs, so letting them in would directly increase employment opportunities for people already in the United States. Around half of all technology companies in Silicon Valley are founded by people born outside the US and about a quarter of all US inventors are immigrants.

We know there is a long line of people wanting to get H-1B visas, for which you need a university degree and “specialty” skills – and there are many US companies wanting to hire such people. Allowing in such people – and encouraging them to become permanent residents – would also have many indirect benefits, including increasing our domestic market size (as they buy goods and services) and helping to support housing prices (as they need to live somewhere).

These new arrivals will pay tax and make social security contributions – helping to bring our federal budget under control (see this recent report by the Congressional Budget Office).

We should also encourage our universities and engineering schools to provide more technical education online and at low cost to people both inside and outside the United States. Make it easier and much cheaper for everyone to acquire both basic math and more advanced scientific skills – and help US-born people take advantage of all the opportunities created by newly arrived entrepreneurs. Lower the barriers of entry into the technical elite of the future.

The population of the United States was 76 million in 1900, 152 million in 1950, and 238 million in the mid-1980s. We are now over 319 million and, according to official projections, on our way towards 500 million by the end of the century.

No other industrial country can consider using immigration as a way to boost its economy – there is too much political resistance and too little by way of opportunity elsewhere.

This is certainly the only place in the world where parts (but not all) of the political left can agree with much of the business sector that “immigration reform” should increase the number of people able to come to the country.

We should use this particular American advantage well.

Olympia Snowe

Olympia Snowe is a former Republican US Senator from Maine known for her centrist politics. She retired from the Senate in 2013, citing increasing bipartisanship. She is the author of Finding Common Ground: How we can fix the stalemate in Congress. The Guardian’s Jana Kasperkevic interviewed her about a variety of issues; these are Snowe’s suggestions from that interview on fixing unemployment.

When you were still in office, you proposed a bill that would allow unemployment benefits not to be taxed.

At one point, the Wall Street Journal noted that 90 million people were unemployed. Janet Yellen, the new chair of the Federal Reserve, has spoken to this question, tying interest rate policy to what is happening in our economy, especially in the job market.

I mean, we are just lagging. We always worried about a national financial crisis: would we have a lost decade like Japan?

For a better part of a decade now, we had the kind of stagnation that should not be part of the economy to the degree that it is. And that’s because we don’t have that kind of focus in Washington.

So yes, helping those who have unemployment benefits not to be taxed, to the extent that we can do that it, would have been helpful to people until they can get back on their feet.

There’s no question when you see the economic disparity that occurred as a result of this downturn and because of repercussions of the financial crisis of 2008, that people lost their life savings, their equity, their houses, went through foreclosure or lost their job or haven’t been able to replace what was once a good paying job with an equivalent. And they have had to accept far less as a result.

We need to provide job training, we need to be doing a lot of things to make investment in policies on education, on job training, on education and, of course, on tax reform and regulatory reform and some budgetary issues that affect this country that would provide some certainty that the Congress has long ignored and overlooked.

You mentioned job training. What should the government focus on? Is there a specific field?

Before the government delivers its job training, it needs to consolidate a lot of the programmes that come from the offices of federal government, make it much more coherent, more effective structure. Matching the jobs that are available with the training. There is the whole skills gap question as well. There are positions and there are vacancies because we can’t find qualified people so we have to match up the people with the skills and that’s a huge challenge for this country. One that should be focused on between the private sector, business organisations and Congress to get this done.

Obviously in technology, we are making more investments in science, engineering and math and so forth, and it’s helping to prepare people for what will continue to be the way of the future.

It’s all a combination. But first and foremost, we have to get this economy righted for the average American.

The Federal Reserve out of Philadelphia said in one of their papers recently that the polarising debate in Washington has affected the economy.

And it has. There is no question. There are many middle class Americans that just aren’t able to get the kind of jobs that they deserve and it’s imperilling their future in this country.

Senator Amy Klobuchar

Amy Klobuchar is the senior senator from Minnesota and a member of the Democratic party. She is also vice-chair of the US Congress joint economic committee. This week she and other Minnesota lawmakers secured $17m of funding for job-training programmes in their home state.

September marked the 55th straight month of private-sector job growth in the US. Since 2010, our businesses have added more than 10m jobs, the biggest increase over a four-and-a-half year period since 1996-2001. Our economy is picking up steam, but more still needs to be done.

In my home state of Minnesota the unemployment rate is down to 4.3% and Minneapolis/St Paul has the lowest unemployment rate of any metropolitan area in the US. Our state has a history of innovation, manufacturing, and attracting creative people who invent things. We have brought the world everything from the pacemaker to the Post-it note.

Americans need to work together on commonsense policies that will give our economy the boost it needs to ensure sustained, robust job growth. As Senate chair of the joint economic committee, I believe we need to embrace an innovation agenda – a competitive agenda for America. We need to be a country that thinks, that invents, that makes stuff, and that exports to the world.

What will that take?

First, we need to support US firms so they can sell their products around the globe and break down barriers for exports, including a long-term reauthorisation of the export/import bank. With 95% of the world’s customers outside the US borders, there is literally a world of opportunity for American companies and their employees. Tourism is just one example of a high-growth US export and the Senate must pass my bipartisan legislation to reauthorise Brand USA. From agricultural equipment to medical devices, American companies can seize on a growing middle class abroad to help foster growth in our own country.

Second, we need to make sure American students and workers have the skills they need to succeed. This starts in high school with a new approach which includes allowing students to complete or at least begin one- and two-year post-secondary degrees in STEM [science, technology, engineering and mathematics] fields while they are in high school. And as our economy changes, many of our workers need to be retrained for the jobs of today, not yesterday.

Third, to complement the training of our workforce, the House of Representatives should take up comprehensive immigration reform. The nonpartisan Congressional Budget Office estimates that the bipartisan Senate bill would increase our GDP by 3.3% by 2023 and decrease our deficit by $158bn over 10 years. Ninety of our Fortune 500 companies were built by immigrants; 200 were built by immigrants or kids of immigrants. Yet while we allow unlimited visas for pro hockey players, we severely limit visas for engineers, doctors and their spouses. The House of Representatives needs to pass comprehensive immigration reform.

Fourth, something must be done about income inequality in our country. With an economy that is 70% consumer-driven, if workers can’t afford to buy goods, we cannot expand. Increasing the federal minimum wage and making it easier to afford college is a good start.

Fifth, if we want to expand the American economy through exports, US goods need to get to market. Our stable domestic energy supply is a plus but we also need to improve our roads, bridges, rail and barge systems. This means a long-term transportation plan, and creative ideas like an infrastructure bank.

Finally, we need to reform our tax code and put in place a long-term stable approach to reducing our debt and updating regulations. Republicans and Democrats agree that our tax system is overly complex, out of date, and inefficient. There is bipartisan support for creating certainty, incentivising job creation at home, and lowering our corporate tax rate and paying for it by eliminating loopholes.

With our economy continuing to improve, those who have spent the last several years playing politics have a choice: they can continue their political games, or join me and other members of both parties who want to work on policies that will expand our economy and keep our country moving forward.