State of the Union Address, and Response: Too Little on Jobs

On Tuesday, President Obama delivered his State of the Union Address, or SOTU.  (Love these abbreviations!  Once the province of Washington’s hard-core political followers, they’ve reached the mainstream.)  As I said, the POTUS gave the SOTU, as the SCOTUS didn’t declare it unconstitutional. 

Republican Senator Marco Rubio delivered a Republican response, with the expected level of disagreeability.  Although Obama, of course, called for bipartisan cooperation, the two sides seemed as far apart as ever.  The issue of this blog, though, is the number of American jobs.  So what happened to the prospects for improving that?

Obama said that “after” the recession, 6 million had been created.  That is true, only if you start from the very bottom.  During that time the population has increased over 10 million, so that is no great achievement, especially when defined as starting from the recession’s low point.  He spoke of the need to “reignite the true engine of America’s economic growth: a rising, thriving middle class,” and suggested changing the tax code to drop rates for companies creating United States jobs.  He called “a growing economy that creates good, middle-class jobs” “the North Star that guides our efforts.”

Strong stuff, but what specifics did he offer?  Three good, but small, things:

-          Starting “manufacturing hubs” in conjunction with two government departments

-          An infrastructure program to employ people for “our most urgent repairs”

-          An effort to “reward” (method unnamed) schools creating more science, technology, engineering, and math classes indicated through partnerships with employers.

From a jobs perspective, though, his address went sharply downhill from there.  The only thing on the subject he mentioned after that, enough for commentators to call it one of the most important parts of his speech, was advocacy of a large (24%+) minimum wage increase. 

That idea is misguided.  That mandated boost would neither put people into the middle class, nor help a broad-based set of workers, nor lift large numbers of households up out of other than nominal poverty.  It would, though, cut the number of jobs (how many is very much open to debate, but the direction is not), and raise prices through its higher labor-cost component.  A $9.00 minimum would do little or nothing for the workers of New York or Los Angeles, since they are already at or above that level, but it would force employers in lower-cost areas, many of which have unemployment rates higher than in the large cities, to pay more than market rates for workers.  Squeezing companies already short of customers and therefore short of positions is not the way, and surrendering some jobs to make others slightly better is not what the country needs now.   

What was missing in Obama’s speech?  All three of his specific ideas have merit, but the last two were weak.  America’s deteriorating American infrastructure requires far more than addressing what is needed the most.  The American Society of Civil Engineers in 2009 gave its quality a summary grade of D, and the World Economic Forum, between 2005 and 2012, dropped it from first worldwide to 14^th.  Obama has shown real interest in bipartisan efforts, and this one should be a natural;  neither conservatives, who don’t want America to fall further by world standards, nor liberals, who are most willing to spend the money, will let our bridges, highways, roads, airports, and electronic connectivity get much worse.

As for science-related jobs, the field is hardly the wide-open hiring area implied by those who say American universities do not produce enough science graduates.  Many want to work in academia, but as of 2009, only 14% of new degree holders in the life sciences were able to get university positions teaching or researching within five years, a share shrinking steadily since 1979, and reports published in 2010 and 2011 show that private industry has not hired enough science doctorates to make the degrees financially worthwhile.  For one example, between 2000 and 2012, American drug companies cut 300,000 jobs, many formerly providing work for Ph.D.s in chemistry.  As a result of poor opportunities, many scientists with doctoral degrees in various disciplines have now been working as low-paid postdoctoral fellows, customarily one- to two-year apprenticeships of sorts, for as long as ten.

So what about the Republican response?  Rubio mentioned two pro-job things, the need for more vocational training and allowing more oil and gas drilling in federal lands, but mentioned his perceived need for corporate tax reduction more than both.  That is not the way to go, either – companies are accumulating enormous amounts of cash, which with their lack of customers, caused by too few jobs, they cannot profitably spend.  Letting them keep more is not a solution.  However, reducing taxes selectively on companies who not only start but maintain jobs in this country could please both sides, and the Republicans have no business not getting behind it.  Just as Obama should promote the number of jobs more aggressively, the Republicans need to focus on that, instead of on wider-scope ideology, as well. 

As of last month, there were 22.4 million Americans who would work if they thought it was available.  A good governmental policy will reduce that number.  In this State of the Union week, in that direction, we did not see enough.