Private Ideas on How to Create Jobs

From the Wall STreet Journal | Sept 7, 2011 | By JOE LIGHT And ALAN MURRAY

When President Barack Obama addresses a joint session of Congress on Thursday, he will face a business community both desperate for a boost in ailing sales and deeply skeptical of the government's ability to help.

Bloomberg News

Bob Greifeld, CEO, Nasdaq-OMX: 'U.S. companies need the ability to recruit the best workers....We must increase the number of H-1B visas available and reform the employment-based green card process.'

Pressure on politicians to act is growing. By any measure, the job market's recovery has been weak. Last Friday, the Labor Department reported that on balance no new U.S. jobs were created in August, the worst showing since last September, and well below the 125,000 needed to keep up with population growth. The White House's own projections call for unemployment to average 9% through 2012.

According to a recent Wall Street Journal/NBC News poll, more than 70% of Americans think the economy has yet to hit bottom. Without action from Congress, two economic-stimulus programs—a payroll-tax holiday for workers and emergency unemployment-insurance benefits—will expire by year-end, causing a loss of 750,000 jobs in 2012, according to an estimate by Moody's Analytics.

"The labor market has shown absolutely no recovery," said Harvard University economist Lawrence Katz. "There's no scenario in which the labor market doesn't continue to need help three to four years from now."

The Journal talked to four groups of people who analyze hiring and hire workers themselves. Here are their views about how to spur job creation:

Associated Press

Carlos Ghosn, CEO, Renault, Nissan: 'The first would be research and development, promoted both publicly and through companies' investments in R&D....The second would be the development of infrastructure.'

Chief Executives

Chief executives of some of the world's largest corporations support repairs to aging infrastructure, financed in part by private money, and point to lower taxes and fewer business restrictions as ways to create jobs.

"I travel the world on a regular basis, and U.S. infrastructure is simply not competitive," said Tom Albanese, CEO ofRio Tinto, the global mining company.

Dominic Barton, managing director of consulting firm McKinsey & Co., said pension funds, asset managers, sovereign wealth funds and private-equity firms are prepared to invest in infrastructure projects and could contribute $250 billion to $500 billion of equity capital to them over the next three years.

The CEOs also want lower corporate taxes in the U.S. and a moratorium or a rollback of business regulations.

"The government needs to be a better partner with the business world," saidMagellan Health Services CEO Rene Lerer, echoing a sentiment expressed by many business leaders.

Yet CEOs also showed a practical streak that is often absent from the Washington debate and a willingness to embrace compromise.

Bloomberg News

Gail Kelly, CEO, Westpac Banking: 'Most important will be to maintain fair and open trading policies, despite likely calls for greater protection, and to encourage the adjustment of currencies globally to reflect the new realities.'

"Political infighting and seemingly disparate objectives...are keeping the U.S. from finding real solutions to real problems," said Roger Wood, chief executive of Dana Holding Inc., the auto-parts company.

Chief executives generally agree that indebted U.S. consumers can no longer drive economic growth in the U.S., and impetus will need to come from developing countries. As a result, they urge the U.S. to embrace global free trade, and make changes that will encourage the growth of export industries here.

Small Business

Pope McLean Jr., co-owner of Lexington, Ky.-based Crestwood Farm, said business has stabilized at the commercial thoroughbred breeder, but sales are still down more than a third from before the recession. That has made Mr. McLean hesitant to add to his 20-person staff, which is down five employees from its prerecession size. "If sales aren't what they used to be, it's hard for companies to say, 'I'm going to hire more people,' " Mr. McLean said. "You've got to have the work to justify it."

In a July survey by the National Federation of Independent Business, a net 2% of small-business owners planned to increase their work forces over the next three months, on a seasonally adjusted basis. That was down one percentage point from June and well below the net 5% that expected to increase hiring in February.

Carey O'Donnell, chairwoman of the Chamber of Commerce of the Palm Beaches, said that the lack of access to capital is the top impediment to growth she hears voiced by small businesses. Loosening financial regulations for banks, she said, could make it easier for business in her area of Florida to grow.

Ms. O'Donnell, who is also president of the O'Donnell Agency, a public-relations and advertising firm, said that cuts in her tax burden would prompt her to add to her own 14-employee staff. "It would reduce the risk of hiring more people, even if it was temporary," she said.

Juan Davis, owner of Fast Lane Clothing Co. in Tampa, Fla., said lowering corporate taxes would help his clothing manufacturing and embroidering business grow.

The company now employs 19 workers, more than at the low point of the recession but far below the 35 workers it had in 2008. "We spend more on taxes and insurance than even on payroll," he said.

New-Tech Companies

When Eventbrite CEO Kevin Hartz reads about the slow job market, he says, he feels like he is in a different universe.

His Silicon Valley start-up, which does online event ticketing, has 170 employees, and Mr. Hartz wants to hire another 70 before the end of the year, including software developers, salesmen and customer-service agents. "It's extremely difficult to find people," he said. "It takes an intense amount of focus from our company."

For more than a year, technology start-ups and venture capitalists have lamented a talent shortage, with bidding wars reported for engineers and some companies turning to outsourcing core development work.

The problem, they say, is a lack of fresh engineering graduates from universities and a frustrating visa process for developers from abroad.

Rick Marini, CEO of job networking app BranchOut, said one of his developers was on the verge of being deported this year after the government required his company to submit additional proof that an American couldn't take the job. "If I could find 10 Americans to do this job, I'd hire them tomorrow," he said.

Shervin Pishevar, managing director at Menlo Ventures, a venture-capital firm with more than $4 billion under management, has two ideas for White House officials: Allow immigrants who create jobs to stay in the country and forgive student loans for new college graduates who become entrepreneurs.

As for the more widely discussed forms of stimulus, like payroll-tax cuts and unemployment insurance, "We don't need them," said Travis Katz, CEO of social travel website Gogobot. "We just need qualified candidates."

Economists

If he had his druthers, Moody's Analytics chief economist Mark Zandi would have the president address big, long-term challenges, such as corporate tax reform and immigration policy while also proposing a $250 billion to $300 billion short-term stimulus package.

The biggest help for the job market, said Nigel Gault, chief U.S. economist for IHS Global Insight, would be a major public-works program akin to those that were seen during the Great Depression. But economists are tempering their wish lists to fit the reality that the bigger the plan proposed by the president, the less likely it is to get through the Congress.

More modest infrastructure projects still are on the table. In a Labor Day speech, Mr. Obama alluded to more than one million unemployed construction workers that could be put to work rebuilding roads and bridges across the country.

Not all economists believe temporary stimulus would help. Republican Douglas Holtz-Eakin, a former director of the Congressional Budget Office and president of the American Action Forum think tank, said measures such as tax credits for new hires and extending emergency unemployment-insurance benefits won't encourage hiring.

"They're all one-time things that don't genuinely raise the long-term growth capacity," he said.

Mr. Holtz-Eakin supports reducing the corporate income-tax rate, allowing for tax-free repatriation of overseas profits and repealing the recent health-care overhaul to help reduce uncertainty and spur growth.

But tax cuts don't get to the root of the problem, IHS's Mr. Gault argues. "You have to believe that the No. 1 reason for lack of hiring is corporations don't see demand for their products," he said.

Write to Alan Murray at Alan.Murray@wsj.com