How to grow the American economy by creating good jobs that can’t be outsourced

November 29, 2012 | Alex Stone

A person caring for three-year-olds can be a glorified baby sitter with minimum certifications earning minimum wage – or a well trained professional in child development with a middle-class career.

Noted economist Bob Kuttner says once you clear away all the smoke and mirrors, we’re facing a simple choice about our economy:

We are shifting irrevocably to a service economy. But there are political choices to be made (or evaded). One path leads to an economy of minimum-wage fast food workers and security guards, many of them with temporary or part time jobs, on one extreme – and billionaire hedge fund managers and takeover artists, on the other. The other leads to a commercial sector of decent wages and terms of work and a human service sector of middle class professionals that serve social needs – which in turn make for a more productive economy and decent society.

Since the American economy has fundamentally changed – jobs that can be done for cheaper overseas likely will not return to America – Kuttner argues that instead of trying to return those low-wage jobs to this country, we should work to turn American service jobs, which can’t be outsourced, into good jobs. He suggests specific public investments in two service sectors that will create good jobs with middle class wages and benefits:

Millions of jobs serving the very young, the very old and the very sick are low-wage jobs. This is a social decision, not the product of private supply and demand, because the qualifications and earnings for these occupations are set socially. A person caring for three-year-olds, for instance, can be a glorified baby sitter with minimum certification as a day care worker – or a well trained professional in child development. The job can pay minimum wage, or it can be a middle-class occupation and career. …

A nursing home worker, likewise, can be a nurse-aide making $8 an hour, or a licensed practical nurse or trained recreation aide earning almost twice that, closer to $30,000 a year. Well-qualified and trained nursing home personnel produce not just better career opportunities and economic stimulus, but better quality of life for the elderly. Having competent staff is more efficient in the long run because there is less turnover, less need for outlays on recruitment, better morale, and fewer incidents of neglect that require far more expensive medical treatment.

His recommendations differ drastically from the approach outlined by either Obama or Romney. His model prioritizes investment in middle class jobs to bring us out of the economic slump:

In these circumstances, fiscal contraction and tight monetary policy would only make things worse. But even very low interest rates, of the sort being implemented by the Federal Reserve’s policy of “quantitative easing,” are insufficient to cure the deflationary condition. What’s needed is aggressive fiscal policy  – and not the kind of fiscal policy promoted by the austerity lobby to “restore confidence” and allay supposed fears of inflation.

It’s eleven pages, but Kuttner avoids the kind of policy wonk-speak that often make these briefs difficult to read – go read the whol thing here.

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Posted in State Economy

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