Stephen Foley: Obama may have to create jobs himself

 

US Outlook: It is as if the US labour market hired a PR team.

The zero figure for jobs growth in August – the first time the rate has been dead flat since the 1940s – seemed almost calculated to get under the public's skin. How Barack Obama must have wished that the figure was plus or minus 2,000, or some such. There are already intolerably high expectations for Mr Obama's speech next Thursday, in which he plans to lay out his ideas for bringing down the unemployment rate. Now, he will address the joint session of Congress as the "Zero Jobs President", and the poverty of the available options to create new employment will be laid bare.

That poverty stems from two separate issues. One is the shakiness of business confidence, which has ebbed as executives have settled into the view that the US is in for a very long period of sub-par economic growth, plus the occasional brush with a new recession. The other is the political situation: the ideological schism between the parties and the looming election, both of which reward lawmakers for doing nothing and blaming the other side for the resulting economic mess.

What are the options? There are four categories, three of which take money, all with flaws. The free option is a package of measures to encourage business confidence, which might involve repealing some hated red tape law (maybe even parts of the healthcare law), but this misreads the situation for companies. Executives' worries are with end demand for their goods and services, not with their profitability, which in many cases is at record levels.

A really bold jobs plan takes real money. The federal government must either pay businesses to hire, pay state and local government to hire, or do the hiring itself. Tax breaks, perhaps on the repatriation of overseas money, for companies that agree to hire is one oft-floated measure in the first of these three categories, but it too fails to reflect the reality of why businesses are not hiring.

Local government has accounted for more than half a million of the jobs lost since September 2008, and was a weak spot in the August numbers. Transfers down to the states and localities could at least stop the job losses, but such transfers appear to be off the table. An infrastructure bank, funding local building projects, could be up and running next year, not soon enough but better than nothing.

Which leaves direct hiring by the federal government, perhaps by a big schools rebuilding scheme or upfront money for energy-saving home improvements – exactly the sort of stimulus measures that worked two years ago and are now being drained from the system, zeroing out other employment growth.

You can't go a day over here without hearing someone quote Winston Churchill: America will always do the right thing, but only after exhausting all other options, he said. I'm not so sure.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test