
I agree the government is not the only answer to the problem of creating jobs, but perhaps they are part of the reason for the slow rate of new business creation. McKinsey Global Institute [MGI] (2011) reported “six sectors illustrate the potential for job growth in this decade: health care, business services, leisure and hospitality, construction, manufacturing, and retail….They account for 66 percent of employment today, and we project that they will account for up to 85 percent of new jobs created through the end of the decade” (p. 9). However, many businesses that I work with aren’t hiring and they are considering downsizing because of the uncertainty of the impact from healthcare reform. Obama’s plan could cause small businesses to close their doors because they can’t afford the healthcare for part-time and prime-time employees.
McKinsey Global Institute. (2011). An economy that works: Job creation and America’s future. Retrieved from http://www.mckinsey.com
Per (Grove, 2010) “A new industry needs an effective ecosystem in which technology knowhow accumulates, experience builds on experience, and close relationships develop between supplier and customer.” I believe this statement is true. The MNCs should gleen the assistance of the baby boomers who still want to work and have valueable experiences to impart on the up and coming workers. This could possibly be done via mentoring programs which the government may help develop (especially in the areas of technology and linguistics where we as a nation fall very short). One other area that the governement may assist in creating new jobs is to provide government contracts in conjuctions with some of the MNCs to create jobs in communication and technology industries to aid the business with marketing their products to new/untapped markets and possibly contracted military work. The government could also appropriate more funding to local schools to provide early on training for business and linguistics skill so that our children are trained to compete globally at a much earlier age.
Reference: Grove, A. (2010). Andy Grove: How America can create jobs. Retrieved from http://www.businessweek.com/magazine/content/10_28/b418604358596.htm#p3
Congress should eliminate the special interest tax breaks that litter the code and reduce the overall tax rate to no more than 25% for businesses and individuals including small business owners. This would make the tax code flatter, fairer, and simpler. Common sense changes to the tax code will ensure that everyone pays their fair share, lessen the burden on families, generate economic expansion, and create jobs by making America more competitive. So that businesses could create more jobs with the money that they save with the tax breaks. The government should also give more incentives to the companies to create more jobs for Americans.
Reference:
Hensarling, J. The facts about the House Republican Plan for America’s Job Creators.www.gop.gov
Brandy,
Good points! If the government does as you suggest, what would be the results, positive and negative?
Professor Green
If we can’t find new ways to keep jobs in the United States then we are headed for a disaster. McKinsey Global Institute [MGI] (2011) reported that “the United States will need to create a total of 21 million new jobs in this decade to put unemployed Americans back to work and to employee its growing population.” We have to find a way to give U.S. companies the same breaks to start businesses as we give to multinational corporations. It shouldn’t be easier for a MNC to come to America to start a business than it is for a U.S. citizen.
McKinsey Global Institute. (2011). An economy that works: Job creation and America’s future. Retrieved from http://www.mckinsey.com
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One major change that the United States Government could make in an effort to keep jobs in the U.S. would be for them to decrease the incentives that businesses receive from moving their operations abroad. Adjusting tax laws for multinational corporations would be one such strategy. “Obama has proposed closing what he calls tax loopholes used by multinational firms, including those restricting the use of foreign tax credits, and preventing companies from deferring taxes on income earned abroad” (Bohan, C. & Dixon, K., 2012). In addition to this action, staying in the U.S. would also be more appealing to multinational companies based in the U.S. if the Government offered some type of tax break or other incentive for keeping jobs inside U.S. boarders. It will be difficult for politicians to create an environment that offers as many (or at least offsetting) benefits to companies as outsourcing or offshoring have in the recent past. However, they must find a way to keep current jobs and newly created jobs in the United States in order to sustain an economic resurgence.
References
Bohan, C., & Dixon, K. (2012). President Obama to propose tax plan aimed at keeping jobs in U.S. Retrieved from http://www.huffingtonpost.com/2012/01/11/obama-jobs-tax-plan_n_1199064.html
Josh,
Interesting! Do you see any unintended consequences of disincentivizing businesses to ship operations abroad?
Professor Green