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by Vault Careers | September 13, 2011


President Barack Obama has created the American Jobs Act; a $447 billion plan that he hopes will be able to stimulate job creation.  He has presented his plan to Congress with hopes of having it passed in a timely manner.  His ability to create jobs will determine whether he gets to keep one.  But what will the American Jobs Act actually accomplish?

Obama Plans to Push the American Jobs Act Through Congress - Associated Press Photo by Seth WenigTax Cuts.  The President’s plan will cut in half the taxes paid by businesses on their first $5 million in payroll, targeting the benefit to the 98 percent of firms that have payroll below this threshold.  It will also completely eliminate payroll taxes for firms that increase their payroll by adding new workers or increasing the wages of their current workers (the benefit is capped at the first $50 million in payroll increases).  Small businesses benefit greatly here.  With large companies getting so many of the breaks, it’s nice to see the little guy get some benefits, too.  Small businesses drive job creation. 

Tax Relief.  Obama plans to continue and deepen the payroll tax cuts for workers that began this year.  The previous cuts led to that little extra money you saw in your paycheck each week.  By cutting payroll taxes in half for 160 million workers next year, an extra $1,550 would go to taxpayers earning $50,000 a year.    At the same time, the plan would allow for more Americans to refinance their mortgages at the current near 4% interest rates.  That act alone would put an additional $2,000 a year in a family’s pocket.  The hope here is that with more money, families will spend more.  If The Wilson Family spends a little more on U.S. goods, American companies will make more money and possibly hire more workers, creating a domino effect that will help lift the economy out of the ashes.  But what happens if the Wilsons buy imported goods?  And what happens if they decide to save their money for a rainy day?  These questions still need to be addressed. 

Putting Workers Back on the Job.  This is an interesting aspect of the job act that includes a bulk of what Obama hopes will lead to the creation of new jobs.  One part of the plan includes a “Returning Heroes” hiring tax credit for veterans.  This provides tax credits from $5,600 to $9,600 to encourage the hiring of unemployed veterans.  Efforts will also be made to help prepare veterans for re-entering civilian life.   Who can argue with a plan to give back to veterans who have given so much for the country?

Other aspects of the plan include efforts to prevent up to 280,000 teacher layoffs, while keeping cops and firefighters on the job.  No job creation here, but with so many facing layoffs every day, this effort will help maintain economic stability and allow them to spend a little more freely without the stress of not knowing if their job is safe. 

The president would also like to set aside $30 billion to modernize schools across the country – building new science labs; creating Internet-ready classrooms; and providing much needed renovations to aging buildings.  In addition, $50 billion would be used for road and bridge projects.  A bank would also be set up to finance more public works projects.  I believe a similarly ambitious effort took place during the FDR Administration and it helped create new jobs.  However, more spending is a scary proposition, despite Obama’s pledge that this plan will be paid for without increasing our debt.  At the same time, who can question America’s need to modernize? 

Pathways Back to Work.  The president would like to extend emergency unemployment benefits to prevent 5 million Americans looking for work from losing their benefits.  He has added some interesting tweaks, including providing unemployment insurance for workers whose employers choose work-sharing over layoffs and a new “Bridge to Work” program that would build on and improve state programs where those displaced take temporary or volunteer work or pursue on-the-job training. 

One intriguing aspect of the plan will make it easier for unemployed workers to start their own business through unemployment insurance.  Small business growth helps an economy recover and by allowing the unemployed who have always wanted to start their own business, the ability to do so, might create new opportunities for job growth in the future.  Another interesting aspect of the program would provide a $4,000 tax credit to employers for hiring long-term unemployed workers.  I equate this to my old days in food retail where we moved old product closer to the top and new product at the bottom.  It’s the same principle, but one that is very practical when considering how hard it is for the long-term unemployed to find a job.  Employers will also not be allowed to discriminate against unemployed workers when hiring, but I find that hard to prove. 

The plan also looks to expand job opportunities for low-income youth and adults through a fund for subsidized employment, innovative training programs and summer/year-round jobs for youth.

--Jon Minners,


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