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Will Obama’s Job Council Create Jobs? Part 2

The Jobs Council has made recommendations that are too dependent on government funding, corporate CEOs that have a history of job reduction, and a committee that does not represent labor.

By MICHAEL P. COLLINS, Author, Saving American Manufacturing

This is part two of a two-part piece. Part one can be found here.

The Committee Chairman

Jeffrey Immelt is the chairman of GE and chairman of Obama’s touted Jobs Council. Neither Jeffrey, nor GE has a very good reputation for job creation in the U.S. Since Immelt took over in 2001, GE has shed 34,000 jobs, according to its most recent annual filing with the Securities and Exchange Commission, yet it's added 25,000 jobs overseas.

Speaking to the Economic Club of Detroit, Immelt outlined what he called an American industrial renewal driven by an emphasis on manufacturing and exports, investment in new technology and research and development, and innovations in clean energy and affordable health care. He said, “The U.S. should aim to have manufacturing jobs comprise at least 20 percent of total employment, about twice what it is now.”
GE said on August 5, 2011, that it planned to create 13,800 new jobs in the U.S, and its annual report says that 10,000 people have been hired in the U.S. during 2011, but at the same time, GE continues to move more infrastructure to China. Under Immelt, GE makes more medical-imaging machines than anyone else in the world, and now GE has announced that it "is moving the headquarters of its 115-year-old X-ray business to Beijing." Apparently, this is all part of a "plan to invest about $2 billion across China" over the next few years. [5]

Fortune 500 Dominance

At a quick glance, these 10 recommendations seem to come right out of the Republican and multi-national corporation playbooks. How many times do we hear these companies demand more drilling of oil and natural gas, less government regulation, and reforming of the tax codes? These demands have everything to do with what the Fortune 500 companies want to achieve in increasing profits and little to do with producing immediate jobs for the working class. I don’t think there is any empirical evidence that supports the claim that significant net new job creation would result from such reforms.

As a whole, U.S. multinational firms reduced their workforce in this country by 2.9 million between 1999 and 2009, according to recent data from the Commerce Department. Meanwhile, they added 2.4 million workers overseas. Most of these companies now make most of their money overseas and many are storing their profits in overseas tax havens. Are these really the companies we can count on to solve our unemployment problems?

Long-Term Nature of Recommendations & Funding

Contrary to what President Obama has said, that “he's 100 percent focused these days on creating jobs,” the fact is that the recommendations are long term by definition. It is hard to see how a corporate tax overhaul, expanded domestic drilling, new regulatory reforms, improvements in education, and investment in research and development are going to lead to job creation in the near future.

Another problem is that most of these recommendations will require Congress to pass legislation, particularly if there is funding needed. The recommendations on investing in education, tax breaks for R&D, and investing in infrastructure projects that encourage retrofitting of commercial buildings must go through congress to be funded.

Political gridlock has prevented Congress from doing much in the way of helping the staggering U.S. economy, and I think it is too optimistic to think that the Republicans are going to help President Obama create jobs or anything else in an election year. A good example is the President's $447 billion jobs bill, which was defeated in the Senate.

Many Recommendations Are Vague

The council’s recommendation of “targeting high-growth enterprises that create new jobs, such as startups and small firms, seems to be simply a slogan or wish. What would the committee know about creating jobs for small businesses since there is only one small manufacturer on the council?

Also, who came up with the naïve notion that increasing the travel and tourism industry by making it easier for foreigners to get visas is a good idea? These are service jobs that don’t pay well and don’t meet President’s Obama’s objective of ensuring that we are putting people to work right now.

There is also a national investment initiative that is supposed to boost job-creating inward investment in the U.S., both from global firms headquartered elsewhere and from multi-national corporations headquartered here. When you review the Interim Report "Taking Action Building Conference: Five Common-Sense Initiatives to Boost Jobs and Competiveness," the explanations read more like general goals with very little description of how things are going to get done.

I must admit that I have strong reservations about government-appointed committees or councils getting anything done, or President Obama accepting the final recommendations. I thought that the recommendations for the Simpson-Bowles committee made a lot of sense, but the administration totally ignored them. These councils also seem to find security in lofty themes and slogans, like "investing in our future, building on our strengths and playing to win,” and are most comfortable with vague (long-term) recommendations.

The Bureau of Labor Statistics (BLS) shows that there were 2.1 million private-sector jobs created in 2011. About 40 percent of the new jobs came from companies comprised of over 1,000 employees or 800,000 jobs. So the data is there to measure real progress in job creation.

Since the committee’s specific goal is to create 1 million jobs by February 2013, we have a measurable objective. The administration and the committee could ask the BLS to find a way to trace newly created jobs in the U.S. back to GE and the other committee members. This should not be very difficult to do unless the committee has political reasons for not publishing the data.

There is another opportunity to measure job creation that is completely controllable by Fortune 500 companies. The multi-nationals want tax cuts, and Obama is talking about lowering the corporate tax rate. Since 1980, there have been at least six major pieces of legislation that gave tax cuts to the corporations and to the wealthy. I cannot find any quantitative study that proves beyond a shadow of a doubt that tax cuts have led to new jobs.

Wouldn’t it make more sense to offer new tax cuts only to those corporations that create good jobs in the U.S., and bring back jobs and products from overseas?

Obama’s Jobs Council has made recommendations that are too long term, too dependent on Congress and government funding, too dependent on corporate CEOs that have a history of job reduction in the U.S., and a committee that does not represent small manufacturers or labor. But I hope the committee can prove me wrong by using the BLS to link job creation data directly back to the Council on Jobs.

[5] The Coming Economic Collapse, March 2012

To read part one of this two-part series, please click here. Michael P. Collins is the author of the book Saving American Manufacturing. You can find more related articles on his website via