About · Press · Contact · Write For Us · Top Personal Finance Blogs
Featured In:

Best Ways To Stimulate The United States Economy And Create Jobs

By Mark Riddix

What is the number one topic on the mind of American citizens? The answer is Jobs, Jobs, Jobs (and not Steve Jobs of Apple)! High unemployment and a slow recovery have everyone worried about the current job market. Policymakers, business owners, and individual citizens all have different ideas about the best way to stimulate job growth. The ideas being proposed vary from spending more money to cutting taxes. Let’s take a look at a few of the best job creation ideas being discussed:

A Second Stimulus

Congress passed a $787 billion dollar economic stimulus bill in 2009 which included nearly $500 billion dollars worth of investments in different economic sectors and nearly $300 billion in tax cuts. The bill did have some effect on the United States economy but was not the job creator that it was expected to be. There is currently talk of a second stimulus bill which would be more focused on actual investments in the economy. Some economists believe that a stimulus bill focused more on infrastructure building may provide a greater boost to the economy as this may have more sustainability.

Tax Cuts

Another proposal being discussed is creating further tax cuts for small businesses and corporations. I recently wrote a post about the pros and cons of tax cuts. Tax cuts would allow companies to retain more of their earnings. The hope is that large corporations and small businesses would then turn around and hire more employees. Another benefit would be increased capital expenditures spending. Increased CapEx spending would require the sectors that help supply and build the “Capital” (or physical assets) to hire more workers in order to keep up with the increased demand for goods and services from the businesses that are now spending more due to the tax cuts. Congress is currently debating whether or not to increase business tax cuts on both small and large businesses.

Jobs Bill

The simplest solution to create jobs may be to pass a jobs bill. A jobs bill would be directly aimed at creating jobs in the small business sector. The goal would be to increase the availability of credit for all small businesses. Since the economic collapse of 2008, credit has been tight for small businesses. Over the past year, credit has become readily available for large businesses, but small businesses are finding that banks still have not turned on the spigots. The jobs bill would be aimed at increasing SBA lending and lowering capital gains taxes, which would encourage entrepreneurship and incentivize investment.

Funding To State and Local Governments

The best bet for the federal government may be getting the money into the hands of state and local governments. Funds disseminated to local governments have the greatest multiplier effect. The Goldman Sachs Group estimates that funding to state and local governments provides twice the bang of individual tax cuts for the rich. By getting funds to these governements, it would allow states to stop raising taxes on residents and from cutting needed services, which would help lower the unemployment rate and not further punish overly-taxed residents.

Do Nothing

This philosophy is rooted in the belief that the private sector alone creates jobs and government policy simply gets in the way. It doesn’t matter what the federal government does because the government cannot create jobs. Less regulations would foster a favorable pro-growth business environment and allow the private sector to create more jobs. Sometimes the economy, just like the stock market, needs a correction and you need to let it run its course.

In my opinion the best way to create jobs would be to take a hybrid approach of creating a jobs bill and offering tax cuts. The jobs bill would focus on bolstering infrastructure and manufacturing so that we do not continually outsource jobs overseas. The tax cuts would only be offered as an incentive to companies that hire new employees. Employers currently get a $1,000 tax credit for hiring new employees. This needs to be boosted since employers aren’t likely to take on a long-term, salaried employee for just $1,000.

What do you think is the best way to create jobs in the United States?

(Photo credit: The Cleveland Kid)

Mark Riddix
Mark Riddix is the founder and president of an independent investment advisory firm that provides personalized investing and asset management consulting. Mark has written financial columns for Baltimore and Washington, D.C. area newspapers and is the author of the book, Your Financial Playbook.

Related Articles

Comments

  • fightingirishlass

    I agree to tax cuts and other incentives to encourage employers to stay or move into an area (state level). I also think that there must be a way to control the unions to allow employers to pay employees at rates at which they can afford to pay without losing profit and yet allow employees to be self-sufficient.

    • Jstew13

      Corporate profits (especially oil companies) are at an all time high yet employment,pay and benefits have been cut. “Control the unions”? Without Unions there is no living wage. The companies will pay the least amount they can get away with. We need investment in infrastructure and rebuild the country and the economy at the same time. Eliminate Farm subsidies to mega farms and oil company tax breaks.

  • http://twitter.com/mrmartman mrmartman

    All of the actions in the deficit reduction compromise do not address the most important solution to our deficit problem, namely lack of JOBS!!

    Federal Revenues are down, because the American workforce is shrinking at an alarming rate. The more domestic jobs that are lost, the more government spends on unemployment, child welfare and food stamps; and the less government collects in revenue from income taxes. If America had an unemployment rate of 4 or 5%, we would be in a much better position to argue about the merits of cost cutting budgets vs raising taxes.

    So why isn’t anyone in Washington talking about job creation? Answer: Because no one has a clue as to how to do it! Not Democrats, not Republicans and certainly not the Tea Party. What we need is an open and honest discussion about why jobs are going overseas and what can be done about it. GE recently announced that it is moving it’s X-Ray division to China. Why? Well, how about the fact that China has cheaper and more educated skilled labor; the fact that China has a universal healthcare system and the fact that China is very supportive of foreign investment. What this means to GE is that they get a smarter and healthier workforce at a bargain price. So, can be done in the US to even the playing field with country’s like China? I’ve got a few ideas if anyone cares to hear them :-)

  • GRIZZCUDDLYBEAR

    APPARENTLY YOU CAN TALK ALL THAT YOU WANT ABOUT TAX CUTTING AND GIVING TAX BREAKS TO COMPANY’S WHO HIRE A PERSON.. A COMPANY WILL STILL NOT HIRE YOU. AS FOR THE WASHINGTON IDIOTS WHO CAN’T FIGURE OUT HOW TO CREATE JOBS, HAVE NO BUSSINESS BEING IN POLITICS IN THE FIRST PLACE,,, AND FOR ALL THE ROCKET SCIENTISTS THEY HAVE ALSO IN D.C. AND ALL THE WORLDS MOST EDUCATED IDIOTS WHO PAID WAY TOO MUCH FOR THEIR EDUCATION AT MIT. DOESN’T HAVE A CLUE ON HOW TO CREATE JOBS..
    AS FOR THE POLITICIANS THEY COULD CARE LESS ABOUT THE PEOPLE WHO ARE STRUGGLING IN SOCIETY TO MAKE ENDS MEET, TOO BAD THAT THE AMERICAN PEOPLE CAN’T FIRE THE IDIOTS IN WASHINGTON BECAUSE THEY HAVING BEEN DOING THEIR JOBS FOR WHAT THEY WERE VOTED TO DO IN THE FIRST PLACE, I AM GLAD I DID NOT VOTE FOR ANY POLITICIAN,
    I HAVE CALLED MANY OF COMPANY’S IN THE PAST,, I ALSO HAVE CALLED MANY OF THEM RECENTLY, AND THE ANSWER I GET IS THEY CAN’T HIRE ME.. AND I HAVE ASKED THEM THE QUESTION (WHY NOT ?) SO IT DOESN’T MATTER HOW MUCH BS A PERSON TALKS ABOUT THE COUNTRY AND WHAT INCENTIVES THERE ARE, OR THE TAX AND DEBT PROBLEMS THERE ARE WITH THIS COUNTRY. IT MEANS NOTHING TO CREATING JOBS.

  • Rsauer_43

    Tax breaks for small business is needed but also a flat tax for corporations ,it would keek them form stashing money in accounts off shore! MY OWN IDEA IS FOR GOVERNMENT TO GIVE INCENTIVES TO THE AUTO INDUSTRY TO BUILD A SNALL CAR WITHOUT ALL THE FRILLS AND GETS 40 MILES PER GAL OF GAS ,,WITH A SELLING PRICE OF AROUND 7THOUSAND DOLLARS THATWOULD BE USED PRIMARILY AS A LOCAL VEHICLE NOT INTENDED FOR CROSS COUNTRY TRIPS ,ELIMINATE ALL THE FRILLS COMPLETELY AND CONCENTRATE ON FUEL ECONOMY AND THE LOWEST COST FOR CONSUMERS NOT A 50 K DOLLAR CAR THAT MOST CANT AFFORD!

  • Freeranger

    The best way to stimulate the economy quickly would be to redistribute income from the wealthy to the poor. Why? The poor would spend it immediately.

    Longer term, we should eliminate tax loopholes such as the mortgage interest deduction and eliminate income taxes and move to consumption taxes.

    • Justin Case

      That’s right, they would spend it, not invest it. We should also eliminate deductions for children and dependents.

  • RAJ PATEL

    If small business are to be defined as a business with revenue under 250000 dollars that can support a owner operator and one or two employee it can work. But small business are to be defined as 25 and 50 and more million dollars revenue, it gets complex and program does not create that many jobs.
    90 % of the small businesses defined by Government has no relevance to Government programs and have no tax problem by not having that great a income. Let us create program for these 90 % by eliminating most taxes and easy to create tax filing fo what taxes are left.
    Recent addition to issue 1099-K form for individual making as little as 50000 on ebay is over reach.

Links monetized by VigLink