Milken Institute
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Jobs are job one
By: Milken Institute
April 30, 2012
What's holding back job creation in the U.S.? A panel of business leaders at the Global Conference agreed that the biggest obstacles are uncertainty over taxes and regulation, access to capital, and education.

Businesses can't operate if they don't know what their taxes will be or if they don't understand the regulatory outlook and the government's spending patterns, said Richard Fisher, president and CEO of Federal Reserve Bank of Dallas. "Businesses are afraid to plan for the future."

"Let's just turn off the rule-making and the regulation-changing, and get back to business," added John Engler, president of the Business Roundtable and former governor of Michigan.

Average corporate tax rates around the world are dropping quickly while rates in the U.S. have remained flat, Engler said. "We're in the same vicious competition globally for investments and jobs that states have been in for decades," he added. "Capital is mobile."

While unemployment remains at 8.2 percent, Rafael Pastor of Vistage International said that a survey of his members shows that CEO confidence is on the rise. "That bodes well for the overall economy," he said. "It also bodes well for confidence in employment."

However, he still sees no signs that the good old days of 3 to 5 percent unemployment will return anytime soon. While 57 percent of his members project an increase in hiring, for instance, 84 percent also say they have learned to be more productive with fewer employees.

Educating the workforce is a huge problem slowing job growth. Sixty percent of American eighth graders are not even proficient in reading, Engler said. China spends a much larger portion of its GDP on education, and "we've gotten soft about it in my opinion," Pastor said.

Half of the population growth in the last decade has come from Hispanics, and the same trend is projected in future decades, but Hispanics lag behind in education, said Javier Palomarez of the U.S. Hispanic Chamber of Commerce.

Education also needs to better address the needs of the modern workforce. "There's 3 million jobs open today that aren't filled because people lack the skills to fill them," Engler said. There needs to be a greater focus on vocational schools that train nurses, welders and other roles in key sectors for which there is a growing demand, Pastor added.

Much of the panel was spent extolling the virtues of Texas. Fisher said Texas leads the nation in non-agricultural employment because "every aspect of our society is pro-job creation." Palomarez agreed that in Texas, "our governors may not be the most eloquent, but we know how to create jobs" and attract workers. Texas is a state that has figured out how to stay out of the way of business, and "if we could somehow bottle that, it would be a wonderful thing."

Jobs in the future are likely to come from health care, business services, leisure and hospitality, construction and manufacturing, Pastor said. "You can't divorce what happens in the private sector from what happens in government," he added. "You have to have a government that lets companies grow by reducing taxes and regulation. . . . One of the best things government can do is get out of the way."

Engler made a passionate case for infrastructure spending as an engine for job creation. He believes we could upgrade the entire electrical grid, and "we've got cities still using wood pipes for sewers," he said. "We could probably upgrade those." When moderator Zachary Karabell joked that his case for infrastructure spending made him sound like a Democrat, Engler shot back: "It's American. That's how we built the country."

Full video is available here.