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Tuesday, November 03, 2009

"Help Wanted" Needs Help

Mark Zandi joins those calling for the government to do something to help to stimulate employment:

Help Small Businesses Hire Again, by Mark Zandi, Commentary, NY Times: ...It is no accident that the recession ended just as Washington’s fiscal stimulus program began providing its maximum impetus to the economy. ...
Still, the recovery remains fragile. ... In order to ensure that today’s tentative recovery becomes a lasting expansion, the government must now make it a priority to deal with employment — particularly among small businesses.
Small businesses are especially vital to job growth. ... In their recent efforts to recharge the economy, policy makers have all but forgotten small business, finding it both easier and more visible to help large multinational firms. Unfortunately, though, big business can’t provide the jobs needed to power the economy forward.
Businesses ... still aren’t hiring. Unless they start doing so soon, consumers won’t have the wherewithal to keep spending, and the economy could slip back into recession. ...
Employment growth historically lags a pickup in gross domestic product. But firms typically increase production by first increasing workers’ hours and adding temporary help. Neither has happened so far: working hours remain stuck at a record low of 33 hours a week, and the number of temporary jobs is still in decline...
Small firms are now struggling to obtain credit; their principal lenders, small banks, are under intense pressure... Credit card lenders, another key source of loans to small business, have aggressively raised their underwriting standards. Policy makers could offer quick relief by empowering the Small Business Administration to provide more credit. ...
To help small companies with cash flow, policy makers should also extend provisions in the current stimulus bill that allow money-losing firms to receive refunds of taxes paid on profits earned in previous years. (In return, they agree to pay higher taxes in the future.) ...
Finally, the government could help minimize the number of new job losses by promoting work-share programs. Nothing damages morale ... more than layoffs... Layoffs are also costly... Seventeen states offer effective work-share programs. Under these arrangements, employers cut workers’ hours — not their jobs — and states make up a portion of workers’ lost wages with unemployment insurance payments. Congress should provide financing to expand such programs nationwide.
These policy steps would not be free, but they could be surprisingly economical. ... This kind of help from Washington could help sustain the new signs of recovery and firmly put the recession behind us.

It's a start, but more than that is needed (and not all of the help should go to business, e.g. extending unemployment benefits would help households having trouble finding employment and stimulate aggregate demand at the same time).

    Posted by on Tuesday, November 3, 2009 at 12:15 AM in Economics, Fiscal Policy, Unemployment | Permalink  TrackBack (0)  Comments (11)

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