New stimulus likely to focus on jobs

President Obama's proposed $33 billion tax credit for small businesses that create jobs conforms to a recent analysis from Kalamazoo's Upjohn Institute (http://www.upjohninstitue.org/) which suggests that these targeted efforts will have a higher direct impact on employment at a lower cost than traditional fiscal policy.

The plan, which Obama announced Friday, calls for a $5,000 tax credit for every net new worker hired in 2010. The total would be capped at $500,000 per company, to make sure most of the money reaches small business growth engines. "The economy is growing but job growth is lagging," said Obama, who has warmed to new stimulus measures again this year.


Many Michigan analysts agree. The $787 billion stimulus package approved one year ago "is helping but is insufficient," writes Institute Senior Economist Timothy Bartik. His research review suggests that the nation is still on a path to fall short of pre-recession employment rates by 10.7 million jobs this year, 8.5 million in 2011 and 5.1 million in 2012.

The problem with conventional fiscal stimulus, according to Bartik, is that it focuses on creating jobs by increasing demand for goods and services. Thus, it is a by-product of increasing national GDP, through tax cuts or public spending, and creates jobs at a higher cost than more direct routes.


Bartik's January Employment Research report says a stimulus package aimed only at job creation could include three components: 1) tax credits for employers creating jobs, 2) payments to employers for work sharing (reducing working hours rather than laying off employees), and 3) public service job creation.

"This package would aim to create 5 million jobs in 2010 and 4 million jobs in 2011, filling a little less than half the expected jobs deficit in each year," according to Bartik. Estimated cost from the Office of Management and Budget and Congressional Budget Office: $276 billion. However, offsets from reduced spending on social programs and increased tax revenues would drive the cost down to $108 billion -- a net cost of about $12,000 per job created.

The drum beat for a more targeted jobs creation policy in Michigan and elsewhere is likely to increase this year. Although GDP growth well exceeded expectations for the end of 2009, job growth is typically a lagging indicator of economic recovery, and unemployed, restless voters strike fear in the hearts of politicians as they approach mid-term elections.

Workin' on the (Michigan) railroad

Governor Granholm last Thursday announced the state will receive $40 million from the U.S. Transportation Department to fund high-speed rail development.

"This Recovery Act funding for high-speed rail along the Pontiac-Detroit-Chicago corridor is a victory for Michigan and the Midwest," Granholm commented. "The national highway system took decades to construct, and a high-speed rail network to all corners of the region will take time. Indiana and Illinois will use these dollars to untangle the knot of freight and passenger lines that slow traffic just beyond Michigan's border -- a necessary first step for the ultimate success of a Michigan route. The funding will give us a head start toward our high-speed rail future, funding key improvements to stations in Battle Creek, Troy and Dearborn."

Michigan's portion of the $244 million in high-speed rail grants to states comprising the Pontiac-Detroit-Chicago corridor will fund construction of a new building and platform at the Dearborn Amtrak station, construction of a new platform and passenger service facilities at the Troy station, and renovation of the building and passenger service facilities in Battle Creek.


In his State of the Union address, President Obama said these grants will "put Americans to work building the infrastructure of tomorrow." In Michigan's case, there are other specific benefits. Working on the railroad will, for example, give the state experience working on rail projects that could take advantage of resident engineering talent and labor pool during a push to diversify its industrial base. Some analysts believe light rail, in particular, holds great promise for Michigan. Also, the availability of high-speed rail options between transportation hubs in Detroit and Chicago will eventually be a recruiting and retention bonus for Michigan employers. Employers in Kalamazoo, for example, have faced tougher times traveling job candidates and existing employees since United airlines stopped serving AZO last fall. Reliable rail services would only help improve access to these employers, and for these employers to transportation hubs.

Communities must lead health reform

The federal health care reform circus will soon be leaving town, and when it does attention will shift to private-sector reform led by employers, business coalitions and other community-based organizations.

The Democrats' loss of the Massachusetts Senate seat formerly held by Edward Kennedy to Republican Scott Brown substantially affected chances for a comprehensive health care package being approved by Congress. MI prediction: Congress will pass "something" representing health care reform, but it will be a largely scaled-back piece of legislation which does little to contain costs or improve quality of care.

If so, private employers and coalitions will be left to explore programs promoting health and wellness in the workforce. Among the initiatives gaining attention in Michigan: "Communities of Health" programs in Detroit and Benton Harbor. More information will be coming in future posts on Michigan Initiatives, but meantime interested parties can learn more at http://www.communitiesofhealth.org/.

Early 2010 bodes well for STEM training

Michigan employers projecting needs for workers educated in STEM (science, technology, engineering and mathematics) disciplines can take encouragement from several public- and private-sector initiatives gathering attention so far this year.


President Obama helped set the tone in his State of the Union address last week, in calling for educational reform that "raises student achievement, inspires students to excel in science and math, and turns around failing schools that steal the future of too many young Americans."


Earlier in January, Governor Granholm had alreading inked a five-part legislative package that will help Michican compete for up to $400 million in federal Recovery Act funds. The Act earmarked a total of $4.35 billion for a "Race to the Top" fund (more at www.ed.gov/) that encourages educational reform in four core areas:


* Adopting standards and assessments to prepare students for college success and the workplace.


* Building data systems that measure student growth and success.


* Recruiting, developing, rewarding and retaining effective teachers and principals.

* Turning around the lowest achieving schools.


Michigan's application for funding, which will be awarded in September, sets goals such as "increasing the number of students ready for college and career, specifically in STEM areas." (Executive summary at www.mi.gov./mde) Other goals include a 5% increase in both high school graduation rate and the percentage of young adults who hold a college degree. The application is supported by 756 school districts representing more than 1.4 million Michigan students. It was sent to Washington with 28 letters of support from schools, businesses, lawmakers and education professionals.

States are also being encouraged to participate in Obama's Educate to Innovate campaign, which the president describes as "a nationwide effort by citizens, non-profits, universities and companies across America to help us move to the top of the pack in math and science education."

At a recent White House ceremony, Obama praised efforts such as the W.K. Kellogg Foundation's $16.7 million grant to the Woodrow Wilson National Fellowship Foundation. Over two years, the fellowship will train 240 new math and science teachers who, during their first three years in the classroom, will teach nearly 90,000 students.

"The 240 teachers will teach in five school districts that serve Detroit, Grand Rapids, Battle Creek, Kalamazoo and Benton Harbor," Granholm explains. "And six universities selected to educate these new teachers are Eastern Michigan, Grand Valley State, Michigan State, the University of Michigan, Wayne State and Western Michigan."

Still, some analysts warn that such efforts will require a collaborative approach among stakeholders if they are to succeed.

"Education to Innovate can be a helpful component if a regional, community-based organization or non-governmental organizations can plug it in as part of its overall effort to overhaul the local education-to-employment system," maintains Ed Gordon, author of "Winning the Global Talent Showdown." (information at http://www.imperialcorp.com/) Otherwise, warns Gordon, whose book has helped bring awareness to the Kalamazoo Promise, "this campaign will be just another program that will help but not address the systemic talent prep failure that is now undermining the U.S. labor market."