June 5th, 2011
02:10 PM ET

Fareed's Take: How to fix America's jobs crisis

By Fareed Zakaria, CNN

All the talk these days in the United States and in Europe is about deficit and debt.

In Washington, the battle over America's debt ceiling continues. But let me tell you about the real crisis we face in America (and Europe has its own version of this), a crisis that could cripple America's economy and its society and would make the debt problem much, much worse.

It is America's jobs crisis.

The number of Americans who are unemployed has roughly doubled since the financial crisis and recession hit. And though that number is declining, it is doing so very slowly. Most new jobs are for part-time work, at wages that average $19,000. That is half the median income.

The official unemployment number does not include the millions who have stopped looking for work or are working part time. So, if you add these numbers together, the actual number of Americans without a real full-time job is closer to 24 million.

Everyone is expecting that the normal pattern of growth and job creation will start up soon, except that it hasn't.

Two years into the recovery, growth is stuck at about 2% and job creation has reached 250,000 a month, which might sound high but is actually barely enough to keep pace with all the new workers entering the job market for the first time.

If unemployment doesn't drop a great deal fast - and it shows no signs of doing this –problems proliferate in all directions.

The most significant impact is on the lives of the unemployed. Studies show that after a few years of not working, people lose their talents, their skills, the work habits that make it possible for them to work productively and to be productive citizens. They risk becoming a lost generation - lost to their country, their communities, their families.

The new normal of slower growth and lower job creation also means lower tax revenues, more unemployment and health benefits to be paid out and therefore a much larger deficit.

President Obama's budget assumes that the economy will create 20 million jobs over the next 10 years. That will be a dramatic acceleration. Over the past 10 years, it has produced only 1.7 million.

Congressman Paul Ryan's plan envisions unemployment dropping to 50-year lows to make his budget numbers work. That would require magic at this point. If you assume unemployment stays high, the deficit and debt become unimaginably higher in 10 years.

So, what to do?

Well, there are several things we could do to spur job creation. I wrote about them last week in TIME Magazine. But, briefly: (a) create a regulatory and tax climate that helps small businesses since they create most of the new jobs, (b) revive manufacturing by focusing on research, technical training and apprenticeship, (c) help growth industries like entertainment and tourism to expand and, perhaps most urgently, (d) rebuild America's dilapidated infrastructure and put millions of people in the construction and housing industries back to work.

The crucial point here is that if you care about America's economy, centrally including the deficit, you need to get people back to work - being productive, spending money and paying taxes. And we need to do this fast.

Post by:
Topics: Economy • Europe • Fareed's Take • Jobs • United States

soundoff (281 Responses)
  1. Wasabiwahabi

    The grammar of those posts to which you refer, I believe were not penned by native English speakers. They were not written by Americans, as their authors distance themselves from their own criticisms. They were – call it paranoia, skepticism, or racism – written by anti-Americans wishing to "troll" on a board such as this to antagonize people whom they believed could not tell the difference.

    June 7, 2011 at 8:31 am | Reply
  2. Howard

    This guy's facile, shallow commentaries are sooooo boring. Fareed, I've been living on social security for
    years now .. and, guess what? I'm comfortable. I'm supposed to feel sorry for someone who only makes
    $19,000 a year? The real reason why we are suffering is because people don't want to work any more.
    Bet you get more than $19k for penning this crap, huh Fareed? Why don't you find a job at MacDonald's
    and start contributing yourself, monkey?

    June 7, 2011 at 11:11 am | Reply
  3. Abhijit Guha

    I feel it it is very difficult to keep service jobs in North America, The arithmatic is so simple. Rs. 50,000/month in India is very good money buy its only $1000/month in USA/Canada. So companies outsourcing their customer service jobs which can be done over the phone to India/Phillipines/Guetamala etc. can save a lot of money. How on earth can Obama tell them to keep jobs here. I think, we the customers, are responsible for this. We will seek out the cheapest product/service & at the same time will tell the company to keep the job here; isn't that sound contradictory ?

    June 7, 2011 at 2:16 pm | Reply
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    June 7, 2011 at 3:21 pm | Reply
  5. Charlie

    I found an interesting chart on Face Book that seems to show the cause and the cure for the problem. In 1968 the poorest 50% of the population brought home 27% of all income. The budget was in balance, 29.5% of the people were in labor unions.The richest 20% brought home 40% of all income. We spent 13% of our income on infrastructure. Compare the school lunches of then and now. Then, we all received three course meals for lunch. Now, it is junk food.

    Now the richest 20% of the population control well over 80% of all wealth. They bring home half of all income, while the poorest 50% bring home 20% of all income. The richest 5% of the population bring home more than the bottom 50%. Only 12% of the population are in labor unions.

    Here is another interesting thought. Most states still rely on sales taxes. Most rich people purchase their goods on the internet and would not know how to begin reporting their purchases, assuming they were honest enough to try. The sales tax is now antiquated. There is a need to move to income taxes, or some tax where the tax payer is more accountable.

    Rich people and poor people buy different things. Poor people buy tangible items, food, clothing, shelter, healthcare, transportation. Rich people buy non-tangible, and therefore, not taxed items. Purchasing tangible items creates jobs. Somebody has to produce those tangible items. Purchasing non-tangible items does not create jobs. There is nothing real to produce.

    Some argue that the problem is more competition caused by Japan, China, Europe and other countries rebuilding after WWII. That building was largely completed by the end of the '60s. Further, and more importantly, the competitors in those countries are also customers. They are revenue neutral. Our competition comes from countries that were not part of WWII. They are third world countries that are competitors, but not consumers. The solution is to make them consumers.

    We need to implement trade laws that require corporations building products over there, where ever over there is, to make their employees customers. That means creating safe working conditions with real wages over there. That is not listed in this article. The solutions are therefore to raise taxes on the wealthy, do something about the bloated salaries of the wealthy, in this country and over seas, and get the money into the hands of the people who will spend it on tangible items.

    Needless to say, this is 180 degrees off the republican solution. That is why every time the republican solution has been tried, unemployment skyrocketed, as did the debt, while the wages of the poor floundered. This has been going on long enough, that they must know this is the truth, but they simply do not care.

    June 7, 2011 at 5:23 pm | Reply
  6. Charlie

    The US now spends 3% of its income on infrastructure. That is why we had the devastation of Katrina, the bridge in St. Paul, and the list goes on. Again, the only solution is more taxes on those most able to pay, dramatically increasing spending on education and infrastructure, increasing the minimum wage, and doing something about the bloated salaries of the rich.

    June 7, 2011 at 5:27 pm | Reply
  7. Shannon

    What is all this whining about "competitiveness"?

    America acts like it's some victim with no power in the global marketplace. The fact is that you're a huge market of 300 million consumers – the biggest in the world. Who do you think those goods that are manufactured by India and China are being sold to? The Indians and the Chinese are too poor to afford them. Europe has the good sense to protect themselves with trade walls and tariffs.

    The fact is that you only have yourselves to blame for your problems. There is nothing stopping you from demanding that your leaders punish outsourcing companies with punitive taxation and tariffs, but you keep falling for the "free trade" mantra being chanted by the same CEOs pocketing millions by shipping American jobs overseas. Competiveness is a lie. Wake up.

    June 8, 2011 at 4:48 pm | Reply
  8. Greg

    Ok here is my take on the current employment issue. First the problem starts with us. What a lot of people don't relize is that Middle and Lower Class America are the game changers in our country. History has proven in the past that these groups in any nation/society, are the ones that call for the changes that they need to survive. There are a lot of problems in our country but what is anybody really doing anything about it. We can sit here and complain but what are WE doing. Our military Budget to me is insane actually. I am going to use just on sticking point on this. We have 12 aircraft carriers in service. 12 ..... do we really need 12. How much is it to run one of those ships. The ship itself, paying for that the crew, the airwing, the pilots, and everything that is needed to run a ship of that size. Again do we need 12??? We have major infrastructure problems, but who is doing anything about this. And if somebody is trying to do something who is supporting them. College students, fresh out of school, under a mountain of student loan debt, and cannot find jobs. But they are still expected to pay on those loans. What are we doing for those people. I am a college graduate, I have a job, it is not in the field that I went to school for, but it atleast its a job. I went to school for IT. We need to stop blaming everyone else, that is what I see we are becomming, we want to blame everyone else for our problems, but to be honest the buck stops with us. So again I ask what are we doing to fix this the problems of our country??? So before you start blamming anybody else first ask what you have done for YOUR country to help fix the problems that we face in todays world.

    June 8, 2011 at 5:22 pm | Reply
  9. NonZionist

    We have to rediscover the glue - the organizing principle - that enables people to work together for political change.

    The government is a joke. Most of the politicians are owned and operated by foreign lobbies and transnational corporations. So hope has to come from outside of government. It has to come from "we the people".

    But we in the bottom 98% are divided and conquered. Worse than that, we are atomized. Night after night, we sit in front of the tv, doing nothing. There are many great tv programs, but watching them does nothing to revive our political and economic system.

    Change will come when people are no longer able to pay the electric bill. The tv will then release its grip on us, and we will be out in the streets, learning what it means to be part of a "society".

    For decades, political struggle has been "uncool". And labor unions have been corrupt and stifling. That needs to change. A healthy human being has a faculty which enables him or her to collaborate with other human beings. We have to find that faculty within ourselves and revive it collectively. Let's stop pretending that every man is an island. We're all in the same boat: Let's deal with it.

    June 8, 2011 at 7:26 pm | Reply
  10. lisa Raimondi

    How to restore America? how to innovate? how to fix jobs in America? ...... The solution is as easy as getting together on september 11th, 2011 – sharing music,art, and culture

    We need to take a step back in order for humanity to evolve. Innovation can not move forward without love behind it –
    that goes for our imagination,our dreams, our individuality,and our innovated children that will take us into the future.

    As of now we are an economically driven society, not morally driven – People fight for their rights, but not for responsibility.

    by coming together for a nationwide picnic on September 11th, 2011 sharing music, art, and culture.

    On our day – without politics, media distractions, or prejudice..... we shall overcome.

    For multiple purposes and meaning, we start at the roots of American conflicts
    * give the floor to our Native American culture – sharing stories, traditions, and the true meaning of respect for each other
    and all living things.

    * give the floor to our community hero's – These are the real celebrities, the rockstars.... follow them with a camera, and possibly a notepad and pen, to take note.

    * give the floor to our local farmers – to inspire more co-op farming and self sufficient communities.

    * give the floor to the "little people" with big ideas – sharing idea's. talents, skills. To inspire more trades, revive the MA & Pa's and open markets. Create jobs in the green direction.

    * give a day to be grateful for all we have and all we can do.

    There is a much deeper perspective to the necessary movement, however, this is step 1.

    sincerely,
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    June 8, 2011 at 10:33 pm | Reply
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      June 11, 2011 at 9:15 pm | Reply
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  12. Mark Norych

    I watched Fareed's special last week on innovation and jobs and read the blog carefully. I must say that I didn't find they key solution to America's job woes. We must find a way to make it possible for companies financially to manufacture products in Asia and India as profitably in the United States. Until we do that, any new innovation/product or item needing mass producton will leave our shores and no amount of government works programs will offset that.

    June 10, 2011 at 10:14 pm | Reply
  13. Michael

    Fareed, with all due respect I disagree strongly on your view of an infrastructure bank for precisely the reasons you advocate it. Private business will not invest in our infrastructure because there is not, nor should there be, a profit motive. By privatizing a bridge, you will start seeing toll ways and sell offs to foreign interests as we have seen in the past
    It is not in the best interest of capitalism to fix things or to take a risk on a brighter future. That is not what shareholders want or the market. It may be what they need, but that is not the world today. So, it must be a national effort. IT must be a call to arms, a large idea that incorporates all.

    The real solution is to shift military spending to the US, utilizing our men and women in uniform and employing citizens. If we were to shift nearly 40% of the military budget and save the $15-20 billion on the drug war (roughly $600 billion) as a security measure to transportation (HSR), Energy (Pickens Plan) and infrastructure (pick a plan) coupled with Energy Grid on a 15-25 yr plan-we would solve all of the US's major problems: economic recovery, unemployment, immigration, energy crisis, cheaper/safer transport, education and a stable infrastructure for growth.

    June 12, 2011 at 1:22 pm | Reply
  14. Jeff Hourihan

    Ideas to Reinvigorate America

    1. Immediately pull out all troops in Iraq and Afghanistan- enough is enough- let the CIA and the Special Forces troops continue their operations there without risking the lives of thousands of typical soldiers
    2. Legalize euthanasia: this would dramatically cut healthcare costs and reduce the deficit
    3. Create a criminal commission to specifically target pedophile catholic priests and sentence them to the full extent of the law- with luck, this could start a worldwide movement which might pressure the church to eliminate the unnatural practice of imposing forced celibacy upon it’s priests
    4. Change the U.S .immigration policy: create an “Ellis Island” of the southwest- more people in the U.S. legally equals more tax revenue, especially after 1-2 generations
    5. Eliminate all campaign funding for U.S. political campaigns- you shouldn’t need to raise $1billion in order to effectively to run for president- the campaign should only last one month and there should be an open forums in which the people petition to be the candidate and those who are registered in their party vote first for their parties candidate, followed by the general vote in which everyone votes for the presidential position
    6. The electoral college should be abolished
    7. Senators and Congressmen should have term limits- no more career politicians
    8. The Glass-Steagall Act should be reinstated- investment and deposit banks should be legally separated
    9. Food commodities should not be allowed to be speculated upon- this causes starvation in America and around the world
    10. Ethanol and crop subsidies should be eliminated
    11. Eliminate loopholes in the tax system- people and corporations should pay what they are supposed to pay
    12. Raise taxes on the rich to Clinton era levels and raise everyone else’s taxes as well
    13. Cut military spending by 30-50%
    14. Revive the labor movement in America- Unions must return as a force in the private sector- look to the German model
    15. Reinvent the education system in America- assume children get no help outside of school and don’t allow ANY child to fail- rethink the way school is taught- look to the Finnish model (only top 10% of college grads are considered for teaching jobs, 2 teachers in each class, same teachers throughout elementary years)- pay teachers more and eliminate tenure- invent new teaching methods using technology
    16. Extract and utilize America’s natural energy resources, specifically natural gas, in order to diminish OPEC’s power and create American jobs
    17. Create federal work initiatives which put the unemployed back to work rebuilding America’s infrastructure (roads, bridges, highways) similar to the WPA of the New Deal
    18. Change the culture of America regarding athletics- move away from organized sports and emphasize intramurals- the point is to deemphasize the dream of becoming a professional athlete and concentrate on academic performance instead
    19. Automatically grant citizenship to any students from around the globe who have earned a PhD in the U.S.
    20. Vastly increase R&D spending, specifically DARPA spending and the rebirth/ reinvigoration of NASA- this is where the innovation of the last 50+ years has originated from
    21. Assert our authority and make strategic alliances in Africa and South America- outmaneuver China who is already pursuing an aggressive plan to secure resources in these regions
    22. Remember that China is a communist nation- China as the lone superpower dictating the direction of the world is an unthinkable future which must be thwarted at all costs- western philosophy must endure and remain dominant
    23. Invest in technology to counteract the effects of climate change in order to protect the world population- specifically technology to break up/ redirect hurricanes, keep temperatures within reasonable levels, protect coastal areas from tsunamis, harness the energy of volcanoes/ protect populations from eruptions
    24. Take a stand against the suppression of the Palestinians by the Israelis- force a two-state solution by threatening to completely cut off funds and military equipment- this will go a long way in changing Arab opinions of the U.S. government
    25. End the Cuba embargo- it is an antiquated and unnecessary policy which doesn’t make sense and is limiting the ability of Cubans to change their society and move towards democracy

    June 26, 2011 at 7:03 pm | Reply
    • Freshieee

      Nice list. I am not with every single proposal, but the academic, foreign policy, economic, and domestic labor proposals could gain a lot of support. Nice ideas. If I become president I'll try to implement a lot of 'em.

      October 1, 2011 at 4:34 pm | Reply
  15. anonymous

    POSTED ON OCCUPYBOSTON BLOG:

    MEDIA BLACKOUT – AN EXAMPLE (CNN)

    TOPIC: JOB CREATION
    Fareed Zakaria is trying to support the 99% but he can do more – reference the Global Public Square Blog.

    http://globalpublicsquare.blogs.cnn.com/2011/06/05/fareeds-take-how-to-fix-americas-jobs-crisis/

    Below is Mr. Zakaria’s take on How to fix America’s Job Crisis:

    “Well, there are several things we could do to spur job creation. I wrote about them last week in TIME Magazine. But, briefly: (a) create a regulatory and tax climate that helps small businesses since they create most of the new jobs, (b) revive manufacturing by focusing on research, technical training and apprenticeship, (c) help growth industries like entertainment and tourism to expand and, perhaps most urgently, (d) rebuild America's dilapidated infrastructure and put millions of people in the construction and housing industries back to work.”

    Our question should be to Mr. Zakaria – what is expected of corporations for job creation?
    Due to corporate greed, a lot of jobs in all sectors – blue and white collar jobs in wide proportions (too wide!) are going overseas. There is no talking point in a, b, c or d above about what is expected of large corporations towards expanding jobs at home and decreasing executive pay/bonuses so that they can hire more people.

    I would like to see the OccupyBoston movement influence the media and stop the blackout - for CNN to talk about what the bloggers are actually saying. People, the 99% are blogging about these issues and not being heard.

    October 5, 2011 at 12:37 am | Reply
  16. anonymous

    http://wearethe99percent.tumblr.com/post/11123158326/im-fortunate-to-be-working-this-year-but-in

    All of you who can identify with the above and want CNN to report on behalf of THE PEOPLE to expose all the BIG Corporations and all the layoffs they have had please post – " I AGREE " nothing more just "I AGREE"

    I personally would like to see them all exposed by sector, by geographical location – how many American workers did they layoff and how many overseas did they hire ??

    October 7, 2011 at 12:49 am | Reply
  17. anonymous

    CALL TO ACTION
    OccupyBoston Community – please post “I AGREE” on CNN blog: http://globalpublicsquare.blogs.cnn.com/2011/06/05/fareeds-take-how-to-fix-americas-jobs-crisis/#comment-123375

    This is to get CNN to expose all the big corporations who are:
    1. Reducing American jobs, not creating jobs
    2. Creating jobs overseas instead of here at home
    3. Cutting costs by downsizing and offshoring instead of lowering executive pay
    4. Cutting costs by reducing healthcare benefits and asking employees to pay more out of pocket instead of reducing executive pay
    5. Cutting costs by freezing merit increases and eliminating bonuses for employees because “the company is not performing” — AGAIN… instead of reducing executive pay
    (Note – this is even high performing employees, while the executives still get bonuses when the company is not performing !! I say where is the ‘freeze’ for them ?)

    THIS IS THE FACE OF THE 99%:

    http://wearethe99percent.tumblr.com/post/11123158326/im-fortunate-to-be-working-this-year-but-in

    October 7, 2011 at 1:12 am | Reply
  18. martin schultz

    I AGREE

    October 7, 2011 at 12:33 pm | Reply
  19. John Devaney

    I AGREE !.

    October 7, 2011 at 8:39 pm | Reply
  20. OccupyBoston Supporter

    I AGREE

    October 7, 2011 at 10:38 pm | Reply
  21. OccupyBoston Supporter

    Stop the 'Golden Parachutes' –

    http://finance.yahoo.com/blogs/daily-ticker/another-corporate-outrage-golden-parachutes-failed-ceos-153646807.html

    “By now you’ve probably heard the news: Leo Apotheker has received a severance package worth $13.2 million in cash and stock for his 11-month tenure as CEO of Hewlett-Packard.”

    CNN should be reporting on news like these and what is fueling the 'occupy' movements by the middle class America. Instead we have Erin Burnett's shallow reporting on CNN on the Occupy Wall Street movement.

    I THINK ANDERSON COOPER SHOULD HAVE ERING BURNETT ON HIS RIDICULIST !

    October 10, 2011 at 10:59 pm | Reply
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