America's President's solution for job creation

April 21, 2013

Our President's creative solution for jobs?

Clearly, returning America to full-employment must be one of our top national priorities. It's our most important near-term challenge because we must have full employment to reduce safety net needs, raise tax revenues, and improve the consumption needed to fuel our economic recovery. Frankly, most economists believe only the return to a full-employment economy can prevent massive tax increases and spending cuts.

I have been critical of our President because of his lack of private sector work experience (read: none). Frankly, I couldn't imagine anyone without real-world work experience leading the largest economy in the world....especially considering the great recession his administration inherited.

A recent Associated Press news-wire article about our new health care law (Obamacare), pointed out it requires employers to provide health insurance or pay a penalty for any employee working more than 30 hours per week. The article said this provision will inevitably result in many companies reducing as many workers' as possible to 29 hours or less. When I finished reading the article, I first thought about the obvious negative consequences. Then I had one of those “Eureka” moments! It occurred to me Obamacare's mandate requiring employers to provide insurance for any employee working more than 30 hours might actually be a major blessing in disguise. Before you conclude I've finally lost my final brain cell, please hear me out.

Today America has the lowest percentage of working-age citizens in the workforce since the early 1980s. We also have close to 23 million Americans either unemployed or severely underemployed. Our economy simply isn't creating enough new jobs to employ everyone who wants to or should be working. Mr. Obama keeps saying his administration has created six million new private sector jobs in the past three years. I'm sure it's true, however, he fails to admit our population has grown even more during this same time-frame. Not even close to enough new jobs have been created to dig us out of the job loss hole caused by the housing bubble collapse.

My Eureka moment! If this 29 hour work week becomes widespread, we will inevitably end up with larger numbers of workers to get work done. For example, consider an employer with 100 employees currently working 40 hours per week to get their work done. If you cut their hours to 29...what happens? Well, if you divide the total hours formerly worked by these 40 employees by the 29 hours which they will now work...voila...it will require 138 workers to get the work accomplished...38 new jobs!

The winners will be those who currently have no jobs. Of course, current workers, who formerly worked 40 hours, will earn less pay. However, that's no different than the coming healthcare system in which most of those now insured will inevitably pay higher fees in order to subsidize the health care costs for millions formerly uninsured who will soon have coverage.

As nutty as the idea of job sharing may seem on the surface, the saving grace for this scenario may be the ongoing drop in the costs of most goods in our increasingly automated economy. Productivity gains may result in an almost magical solution to a better future for the majority of Americans, as the work week shrinks, leisure time increases, and basic needs are met. After all, who wouldn't love to work three or four days a week and still have most basic needs fulfilled. Certainly job-sharing with some shared pain has to be better than our unsustainable expanding welfare state.

I'm not willing to proclaim President Obama a genius who looked at two problems, health care and unemployment, and saw an opportunity to fix both with one act. He clearly must have seen a future in which automation would make it impossible to create enough new jobs if we stick with our current 40 hour work week model. However, I seriously doubt he, or anyone else in D.C., had this much foresight.

I doubt if we will ever know if he and his advisers put these thoughts together. Maybe it doesn't matter. After all, as the old saying goes, “sometimes it's better to be lucky than good”.

Whatever the case, it seems clear the most logical solution to create enough jobs in America will require shorter work weeks for most workers. I see no other likely strategy to make sure a higher percentage of those of workforce age are actually working, paying taxes, and supporting their families.

Should we give our President full credit for coming up with one idea to fix two of our biggest problems? I'm thinking we better wait and see if it comes to fruition. If works though, I suspect we will see him at the front of a long line of credit-seekers. Hmm....maybe I'll be second in line.:-)

These are my opinions. What do you think?

Mike Tower