It's looking as though the recovery of labor markets will follow the pattern of the last two recessions and lag significantly behind the recovery of output. Additional fiscal policy measures could be used to help employment markets recover faster, so this statement from Christina Romer about the administration's plans to create jobs is good to see. But how much of a priority will job creation be for the administration given that it has other things it would like to accomplish? The amount of political capital that the administration is willing to use to push an expanded version of this legislation forward will say a lot about its true commitment to job creation:
Making job creation a priority, by Christina Romer, Commentary, sfgate.com: President Obama has laid out a series of steps that should be at the heart of our continuing efforts to accelerate job growth, rebuild our economy for the long term, and bring American families relief during these difficult times. ...State and local governments also need more help, and this could do a lot to save existing jobs, so I'd like to see that on the list as well.
Our nation faces double-digit unemployment. Far too many Americans still are struggling to make ends meet. But to understand where we need to go, it's important to look back at where we started. On the first days after the president was elected, our economy was rolling toward the edge of a cliff with ever-increasing momentum. President Obama instructed his economic team to take swift action to stem the tide of crisis. And we did..., we took unprecedented - and often unpopular - action to stave off a total economic collapse.
We worked with Congress to pass the American Recovery and Reinvestment Act, which has already provided tax relief to millions of small businesses and families, saved more than a million jobs and begun to lay the foundation for lasting recovery. ... Today, our economy is growing for the first time in more than a year. Last month, employment was nearly stable and the unemployment rate dropped slightly.
But we understand that talking about what we've accomplished may mean little to someone who is still out of a job. That's why President Obama outlined plans earlier this month to accelerate private-sector job creation in three key areas.
First, because small businesses are the No. 1 driver of job growth in America, the president's plan encourages investment by ... proposing a one-year elimination of the tax on capital gains from new investments in small businesses.
We're also calling for the extension of Recovery Act provisions to give small businesses tax incentives to invest in new equipment and other types of capital goods. We will work with Congress to create a tax cut for small businesses that hire new workers. And we will eliminate fees and increase loan guarantees for small businesses that borrow through the Small Business Administration.
Second, because smart, targeted investments in energy efficiency can help create jobs, we will create new incentives for consumers who invest in energy-efficient retrofits to their homes. And we will expand Recovery Act programs to leverage private investment in energy efficiency and create clean-energy manufacturing jobs.
Finally, the president is calling for investments in a wide range of infrastructure, designed to get out the door as quickly as possible while continuing a sustained effort at creating jobs and improving America's long-run productivity. The infrastructure projects include highway, transit, rail aviation and water projects. ...
These are important steps, but there is still so much work that remains. President Obama ... will not rest until every American who wants a job has one.
This post has been republished from Mark Thoma's blog, Economist's View.