Three Steps Congress and the President Must Take to Energize Job Creation

Three Steps Congress and the President Must Take to Energize Job Creation

We’re living in an economic twilight zone. A seemingly healthy economy is seen from afar; one with rising wages and a dropping unemployment rate that now stands at 5.3% – within the range of what’s considered to be full employment. But when you look up close you see an America that’s nowhere close to firing on all cylinders:

  • More than one in four of the unemployed, over two million people, have been looking for work for six months or more.
  • Nearly 94 million people over age of 16 are outside the workforce—a record high.
  • One in seven Americans still lives in poverty.
  • Close to a million more people work part-time than before the Great Recession but want to be employed full-time.
  • GDP growth is stuck in neutral at under 2%.

Our economy needs to expand faster and we need more full-time job creation. Congress will return from recess next week. Together with the President, they should take up an agenda with the following three steps – all of which have bi-partisan support – to ramp up job creation.

  1. Lift the Oil Export Ban

Dating back to the ‘70s fuel crisis, the U.S. energy sector is still barred from selling crude oil outside the country, with few exceptions. No longer does this make sense from an economic or a national security standpoint. Our newfound capabilities to efficiently extract energy from shale, of which we have in abundance, have helped put America at the top of the pack in oil and gas production.

It’s estimated that lifting the ban would lead to approximately 400,000 jobs being created annually from 2016-2030, along with adding $86 billion to our gross domestic product. To boot, national, state, and local governments, many of which suffer from strained coffers, would reap a combined $1.3 trillion in revenue. Finally, lifting the ban would contribute to lower gasoline prices and increased American energy security.

2. Reform the Corporate Tax Code for Businesses Large and Small

The U.S. corporate tax code makes our companies uncompetitive. At 35%, the tax rate is the highest among industrialized nations. U.S. multinational companies have an estimated $2 trillion in earnings currently trapped overseas. Just enacting a repatriation tax holiday could bring well over a half trillion dollars into the country. But the rate must be lowered permanently to incentivize corporations to invest and create more U.S. jobs.

Improving the individual tax code is equally important for job creation. Over half of the private sector workforce is actually in smaller companies – LLCs, LPs, etc. – that pay income tax at the individual rate. This rate tops off around 40% but can rise to 50% or more when state income taxes are included. Given that more businesses are now dying than being created, and that most small businesses – the sector accounting for two-thirds of net new jobs – pay at the individual rate, Congress and the President must modify the structure to lower the cost of doing business and make creating jobs easier.

3. Nurture Innovators and Entrepreneurs, Including Immigrants

Today, the U.S. grants less than one in ten green cards for economic reasons, yet some international competitors welcome up to half their immigrants for that purpose. Celebrated as the land of innovation, the rate of start-up creation in America actually has been declining for the last few decades.

Despite restrictive policies, foreigners who have been allowed into the U.S. have made immense economic contributions. A 2011 report suggests that nearly half of the top 50 venture-backed start-ups were founded or co-founded by immigrants. Another study indicates that nearly two jobs overall are created in industries associated with computers and engineering with the entrance of every one immigrant with a high-skilled work visa in those industries. Moreover, while immigrants comprise just over a tenth of the population, they account for about a fifth of small business owners. While comprehensive immigration reform is at a standstill, Congress and the President can increase job creation through legislation increasing visas and green cards to foreign innovators and entrepreneurs.

Implementing these three proposals by no means will cure all of our economic ills. But harnessing our abundant energy, making fixes to create a pro-growth tax code, and welcoming the best and brightest foreigners to apply their talent here will take a significant step toward restoring the dynamism that the U.S. economy can – and should – achieve.

Steve Odland, a CNBC contributor, is CEO of the Committee for Economic Development and former CEO of Office Depot and AutoZone.


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