Reversing the Middle Class Job Deficit
This morning’s first session featured Thomson Reuters Digital Editor Chrystia Freeland interviewing Alan B. Krueger, chairman of the President’s Council of Economic Advisers and a member of the Cabinet.
The conversation started with the current state of the economy, and the polarization of the jobs market. Krueger stated that the economy was losing 800,000 jobs a month when President Obama came into office and the country was losing manufacturing jobs at an alarming rate even before the recession started.
This segued nicely into a discussion about China and the effect that Cina’s fast growing economy has had on US jobs. In the early 2000s, China began to compete with manufacturers in the US. Moving to the frontier of different technologies so quickly, this had a lasting affect on jobs being lost in the US. From 2000-2007, the US lost 3.5 million manufacturing jobs.
To combat this, Krueger talked about the President’s interest in setting up institutions of manufacturing innovation. And it’s not limited to the manufacturing sector, as the same policies would work in creative industries and other sectors. This, in turn, would help both highly skilled and less skilled workers, taking place in regional clusters.
While discussing the issue of middle class jobs, the conversation inevitably shifted to income inequality. Although the top 1% has been extremely successful, Krueger emphasized that it has become too much of a good thing and it has reached the point where it’s had an adverse affect. He explained that the top 1% had an increase in income that was equivalent to the total amount of income received by the bottom 40%. With regard to spending and saving, he said that the top 1% spend about half of their income, while the bottom 99% spends 90% of their income.
As for trying to reverse the middle class jobs deficit, Krueger mentioned an array of possible solutions. He emphasized a lot of the President’s current policies, such as the JOBS Act. He talked about the need for investment in human capital, which is especially important in the US. “We’re not using our talents to our fullest ability. We’re not channeling our investments.” To elaborate on this point, Krueger talked about the need to improve our country’s infrastructure, which will in turn provide jobs for people that don’t have a college education. There’s a long way to go to fix the middle class job problem. But as Krueger stressed in the post-session Q&A, the most important factor in creating jobs is improving the overall economy.