Our government cannot spur job creation and support economic sustainability with one singular fix. At best, the approach to modernizing economic development at the federal level is an incredibly nuanced and dynamic process that will require unprecedented collaboration.
We’re fresh off a campaign cycle that shouted everything that is wrong with our economy. It became abundantly clear that the solution to our problems is far more complex than a mere fix to our tax system. At 39 percent, the corporate income tax rate in the United States is dramatically high. In fact, it is the third highest globally, and substantially higher than the average weighted rate of just under 30 percent.
Even with a majority in the House and Senate, Republican leaders may face a challenge in restructuring the federal tax code, which some see as the first necessary step in driving job creation and bringing back economic stability to communities that were hardest hit during the recession. Consideration for opening the window of repatriation of dollars held abroad, for example, will increase significant capital flows back to the United States.
{mosads}Other programs have been proposed, including the Investing in Opportunity Act (IIOA). The bill presents an opportunity to address a challenge faced by businesses and municipalities across the country: lack of access to capital. By removing a tax disincentive that stands in the way of private sector investment, the bill provides alternative paths for funding economic development related projects by allowing investors to temporarily defer paying capital gains taxes.
But it’s just not the taxes that are hampering business growth. Companies also face inordinate regulatory burdens, which effectively force them to expand or move their operations outside the country. According to data from the George Mason University’s Mercatus Center, each industry faces a median of more than 1,100 restrictions.
Interestingly, three of the top 10 most regulated industries are in manufacturing, which is often referenced as facing incredible decline, having experienced a loss of 5 million jobs since the year 2000. It remains the single largest industry sector in the United States.
Yet the issue remains, begging the question, do we have a talent problem? Have we placed so much focus on having our students exit the K-12 system to enter four-year institutions that we have skipped over the importance of skilled, technical labor that can fill the jobs required for advanced manufacturing and other sectors? Both pathways are necessary in order to maintain and enhance our global position.
National unemployment continues to decline. At 4.6 percent, the rate is resting in a position most economists would argue is steady, which can be a good thing. However, many of those individuals considered employed are technically working below their potential or part-time in order to gain employment, furthering the argument supporting the need for additional training resources.
At a Communities that Work event last month, U.S. Commerce Secretary Penny Pritzker spoke about workforce development programs to address the issue of 5.5 million job vacancies, yet there are 7.8 million unemployed workers in the United States. This skills gap will continue to grow, with estimates that there will be a need for another 10 million skilled workers by 2020.
With that in mind, are we preparing students today for the jobs of tomorrow, or the jobs of yesterday? The way we educate the workforce is changing. Nationally, we could benefit from retooling our learning models to ones focused on a culture of educational instruction that promotes solving world problems and generating new ideas.
We should promote entrepreneurship and have a more nimble, entrepreneurial central K-12 system. With smarter alignment of education outputs and business needs, we can develop a generation of creative problem solvers who think globally, act entrepreneurially and are prepared for tomorrow’s job market.
Federal investment in research and development has declined in recent years. Such investment, particularly when connected with industry, can result in growth in innovative and advanced products coming to market. While state spending on research and development increased by more than 11 percent between 2010 and 2011, federal investment declined by 9 percent.
Policymakers have an opportunity to take significant steps to share the future trajectory of our economy. We need to do more to support business growth and make it easier for our companies to do business in the United States. We need to invest more in our people through K-12 education and workforce training. We must capitalize on the incredible research and development that is occurring throughout this great nation of ours. The time is now for taking action.
Chris Camacho is president and chief executive officer of the Greater Phoenix Economic Council. He serves on the Economic Innovation Group Policy Committee.
The views of Contributors are their own and are not the views of The Hill.