Opinion: Columnists

Fixing the unemployment problem

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Photo - SAN FRANCISCO, CA - SEPTEMBER 27:  A "now hiring" sign is posted in front of a clothing store on September 27, 2012 in San Francisco, California.  (Photo by Justin Sullivan/Getty Images)
SAN FRANCISCO, CA - SEPTEMBER 27: A "now hiring" sign is posted in front of a clothing store on September 27, 2012 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
Opinion,Diana Furchtgott Roth,Columnists

With the new Labor Department report showing slow job creation in October and an unemployment rate close to 7.9 percent, the winner of the presidential race will want to revive the job market to claim the mantle of success.

Deloitte LLP, one of the big four national accounting and consulting firms, has published a new set of recommendations on how to proceed.

In "Brawn from Brains: Talent, policy, and the future of American competitiveness," Deloitte researchers Bill Eggers and John Hagel ask: What policies speed up development of workplace talent and employment? What policies slow it down?

Deloitte's emphasis is on talent competitiveness -- from removing roadblocks in the economy to raising skills of job seekers.

The authors offer suggestions to develop talent through changes in education, immigration, occupational regulation, foreign direct investment, unemployment insurance and patent law.

» Education: The era of the lifetime job is over, the era of lifelong learning is in. Traditionally, students have been forced into expensive classroom graduate programs that can last years when they want to switch fields. But online education can speed up the process.

For American high school students, apprenticeships and vocational education, common in other countries, are underused, although America's universe of community colleges has been expanding. Many new forms of education are yet largely untapped, such as free online education from great universities. MIT and Stanford are just starting this approach to educating a wider audience. Google has a new open university, Udacity.

» Employment regulation: Many professions, such as law, medicine and dentistry, rightly require licensing. Applicants must pass stiff exams. Other vocations, such as interior designer and food truck driver, are licensed arbitrarily at the discretion of the state. These requirements present roadblocks to entrepreneurs. Two examples: A licensed hair braider in Utah needs to pay $16,000 and study for two years. A licensed interior designer in Washington, D.C., needs 2,000 days of study before taking an exam.

Eggers and Hagel propose reviewing licensing requirements to see if they unnecessarily constrict the supply of skilled or semiskilled labor. They also call for licensing reciprocity among states.

» Immigration: The battle for talent is global, and our immigration policies are hurting us. We educate foreign nationals, often at taxpayer expense, and then make it difficult for them to get visas to stay in the United States. In contrast, Canada proposed a new law in April that would allow employers to assess the credentials of visa applicants before the government awarded the visas, simplifying the process.

The Deloitte report recommends expanding numbers of H1B visas that allow employers to hire high-skill workers in technical occupations, so that American employers can harness the power of the foreign talent pool. Too many talented students, such as engineers and computer scientists, are returning to their countries of origin, such as China and India.

» Unemployment insurance: Generous terms for federal-state unemployment insurance keep the unemployment rate high because some people wait until their benefits run out before accepting new jobs. Eggers and Hagel propose paying benefits in a lump sum, so that unemployed workers can afford to relocate or invest in training. That might also negate any perceived advantage in waiting to take a job.

Second, states could link unemployment benefits to job training. Some proportion of the benefits could come in the form of training rather than cash. Finally, the government could follow the German model and pay the employer for a short time if the employer does not lay off the worker.

Job creation isn't moving fast enough. It's time to try a different set of solutions.

Examiner Columnist Diana Furchtgott-Roth (dfr@manhattan-institute.org), former chief economist at the U.S. Department of Labor, is a senior fellow at the Manhattan Institute for Policy Research.

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