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The GOP Needs to be More Than the Party of Heroic Entrepreneurs and Tax Cuts

While the official US unemployment rate continues its steady decline, many other labor-market metrics are far less encouraging. The economy still has nearly 3 million fewer jobs than when the Great Recession began — and 10 million to 12 million fewer than if it were back to the pre-downturn trend. Labor force participation rates have collapsed, with most of the decline due to weak labor demand rather than long-term demographic changes.

The job climate for young workers and the long-term unemployed is particularly toxic. For instance: The long-term unemployed account for 37% of the total unemployed population, three times what’s typical during an expansion. [See above chart.] The risk here is that the long-term unemployed turn into the permanently unemployed as their skills degrade. As it is, there’s a bias against hiring these folks.

In National Review, AEI’s Michael Strain highlights a number of possible policy options. Among them:

1. In many states, companies that need to cut labor costs have the option of giving employees a shortened work week. Unemployment benefits partially compensate for lost wages, and workers get to keep their jobs and benefits. “A limited but active program to keep Americans working might include expanding, supporting, and publicizing work-sharing UI programs.”

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. Lowering the minimum wage for the long-term unemployed, while also permanently expanding the Earned Income Tax Credit for all working families.

4. Relocation subsidy to help the long-term unemployed move from high-unemployment areas to low-unemployment areas. Strain: “A program like this already exists under the Trade Adjustment Assistance program. Certain workers who have secured employment in a new city can receive a relocation allowance of up to 90 percent of the ‘reasonable and necessary expenses’ of moving, plus an additional lump-sum payment of up to $1,250. The unemployment-insurance system could create a similar program for the long-term unemployed, possibly financed by letting them take an advance on their UI benefits.”

5. Unemployment insurance-funded lump-sum bonuses to unemployed workers when they get a job “as an incentive for them to search harder and more efficiently.”

6. Assistance to those long-term-unemployed workers who want to start businesses.

7. More high-skill immigration, since “research suggests that skilled immigrants are 30 percent more likely to start a business than U.S. natives — and new businesses create jobs.”

8. Delaying the health care reform requirement that firms with 50 or more full-time workers provide their employees with health insurance.

Strain offers several other ideas, and then gives this important conclusion:

None of these policies are incompatible with the reasonable and correct conservative opposition to massive government programs and to inefficient, poorly designed, and cronyist stimulus packages. But if the GOP wants to enact them, it will have to embrace — or at least acknowledge — the power of active but limited government to do good for society.

Republicans need to be more than the party of the heroic entrepreneur, more than the party of ever-lower marginal income-tax rates, more than the party of balancing budgets and maximizing economic liberty by minimizing government. They need to show that they care about the poor, the struggling, the vulnerable — and that they are willing to pitch in and help. A great place to start would be tackling the most serious economic problem facing the country today, by championing creative, genuinely conservative public policies to decrease unemployment.

  1. BrentB67

    The lack of private sector job growth and long term unemployment is rooted in failed government intervention so the answer is more of the same?

    Why can’t the conservative prescription be: Get the government out of the way and let risk capital be invested?

  2. John Walker

    I dislike using this terminology, but I think there’s a disconnect between policy and messaging.

    Republicans need to be more than the party of the heroic entrepreneur…

    This was a huge problem in the last Presidential campaign.  Romney seemed to be the champion of “entepreneurs” (whoever they are) and care little about the people they employ who are concerned with a steady job, advancement in their careers, a stable foundation for their family, and a secure retirement.

    But of course, easing the regulatory and taxation stranglehold upon creators of jobs is precisely how one helps those solid citizens who aspire to a better life through their own effort and would vote in their own self interest were it clearly articulated to them.

    Sadly, I have concluded that the Republican party, at least at the national level, is not an effective vehicle to deliver this message.  Can you imagine a Republican institutional advertisement speaking of the correlation between the minimum wage and youth unemployment?

    Me neither.

  3. Joseph Eagar
    BrentB67: The lack of private sector job growth and long term unemployment is rooted in failed government intervention so the answer is more of the same?

    Why can’t the conservative prescription be: Get the government out of the way and let risk capital be invested? · 1 hour ago

    Because we don’t have enough political power to make that happen?

  4. Peter Meza
    John Walker: 

    Sadly, I have concluded that the Republican party, at least at the national level, is not an effective vehicle to deliver this message.  Can you imagine a Republican institutional advertisement speaking of the correlation between the minimum wage and youth unemployment?

    Me neither. · 34 minutes ago

    Even if the Republicans would deliver such a message, which we all know they wouldn’t, can you imagine the Democrat party even remotely entertaining such a suggestion?  It has taken the Democrats a lot of effort since the Progressive Era to get these economic old wives tales written into law.  There is no way at this late date that they are going to even partially agree with the premise that backing some of these regulations out would help any working person.  Reduce the minimum wage?  That would hurt people (the Democrats would say), not help people.  Still I think we should make the effort.  Not until the majority of the electorate has read and agreed with Economics in One Lesson are we going to make any progress.  

  5. Xennady
    Peter Meza

      Not until the majority of the electorate has read and agreed with Economics in One Lesson are we going to make any progress. 

    Then you will never make progress.

    Have a nice day, and thanks for playing.

    You lost.

  6. Peter Meza
    Xennady

    Peter Meza

      Not until the majority of the electorate has read and agreed with Economics in One Lesson are we going to make any progress. 

    Then you will never make progress.

    Have a nice day, and thanks for playing.

    You lost. · 20 minutes ago

    It was meant metaphorically.  You have a nice day as well.

  7. Xennady
    Peter Meza

    It was meant metaphorically. 

    It doesn’t matter.

    The GOP will never ever be able to make a political case for repealing the minimum wage- but it endlessly, relentlessly fantasizes about it.

    It could quite easily make a case for ditching a few million pages of idiotic regulations- but somehow never gets around to making that case.

    It is fascinating to note that this plan presented here- to make the party more than the party of “heroic” entrepreneurs, we’re told- never even mentions the invisible foot of government (to borrow from Dick Armey). Instead, we get nice eight point list of wonderful things big government can do to help those “heroic” entrepreneurs including such GOP establishment staples as cheaper cheaper labor and more more more immigration.

    In other words this is just the same old same old GOP shinola, complete with the usual prattling about the poor and “vulnerable.”

    Spare me. If the party really wants to win elections it needs to come up with a way to convince people its policies  will put more money in their pocket, not argue that they’re better off with less.

    And seriously- have a nice day.

  8. Pilli

    “They need to show that they care about the poor, the struggling, the vulnerable — and that they are willing to pitch in and help.”

    We need to define the “Poor.”

    The 2013 Federal Poverty Line (FPL) guideline shows a family of 4 making less than $24,000/yr to be “poor.”  This family can get food stamps, day care assistance, an Obama phone.  Most of these programs are for families at 135% of FPL. ($32,400)  These are programs that I know of.  There are probably dozens more.  The assistance can double their income in value.  Are they still “Poor?”

    Seems to me, most of these people have had and still have budgeting priority problems.  I can get a new 60″ flat screen from Aaron’s Rents for $60 a month but I can’t save $60 a month. 

    I don’t know how to enforce intelligent budgeting and ban stupidity but there ought to be some kind of incentives that would do the trick.

    It may seem that I am blaming the poor for being poor.  I am.  There are too many true stories of people making it big after failing numerous times to discount.

  9. Vald the Misspeller

    Strain seems to think long term unemployment is the result of too much minimum wage and not enough unemployment insurance. This is bit like saying the Hindenburg’s problem was too much hydrogen and insufficient altitude. Tinkering with the minimum wage is not politically doable, and a more complicated and expensive UI program is unlikely to do anything except produce even more unemployment — though doubtless with greater inefficiency and at higher cost. I do like “creative, genuinely conservative public policiy” idea number 6, “Assistance to those long-term-unemployed workers who want to start businesses”: we could have the SBA underwrite sub-prime small business loans to the chronically unemployed; they could ask Fannie Mae and Freddie Mac for advice on how not to go about this.

  10. civil westman

    As BrentB67 says, why not simply roll back somewhat the cumulative massive government-imposed interventions which impair capital formation and lead to its misallocation? The proper incentives, unimpeded, will accomplish what is needed. Simpler is better.

  11. genferei

    So Republicans need to be more than the party of liberty, they need to be the party of state control of labour? Where do I sign up?

  12. Brandon Phelps

    BrentB67, I’m not certain James completely disagrees with you, his quote on acknowledging “power of active but limited government to do good for society” notwithstanding. None of the policies outlined are a step in the wrong direction, but I tend to think they seem to be big government lite

    I agree with the post’s title but the policy items listed don’t really stand for anything but heroic entrepreneurs and lower taxes.

    There is the whole (correct) idea that conservatives care as much for the poor and weak as much or more than leftists. We want private organizations and individuals to take care of the unemployed, the sick, the poor and the weak. We use government, as local as possible, to catch those who fall through the cracks. The better question to ask is how to make that happen. I suspect a conservative takeover of big cities would help formulate concrete policies. Nothing talks like real life positive examples. The other crucial thing is get secular non religious folks to form their own civic organizations so they feel they have something to fall back on. Right now all they have is Uncle Sam.