How to Create Jobs

Stephen Davis, University of Chicago, has four ideas on how to create jobs. Here is the summary, full article here:

1. Roll back costly benefit mandates for health insurance. The high cost of health insurance acts as a drag on job creation and wage growth. Benefit mandates set by the states prevent health insurance companies from offering inexpensive, no-frills plans. State-level mandates cover acupuncture, alcoholism treatments, chiropractors, fertility treatments, marriage counseling and much more–about 1,900 mandates across the 50 states. The effect is to limit choice among insurance plans, raise health insurance costs for employers and individuals and depress job creation. State governments should undo these harmful effects by repealing costly benefit mandates.

2. Suspend federal minimum wage mandates. The current unemployment rate among American teenagers is nearly 26%. Minimum wage mandates are among the factors that drive teen unemployment rates to such high levels. These mandates raise the cost of labor for employers who would otherwise hire unskilled and inexperienced workers. As a result, employers substitute away from these workers and rely instead on capital-intensive production methods, skilled workers and self-service by customers. In this way, minimum wage laws undercut job opportunities for the least skilled and the least experienced. The effects are especially pernicious for the young, who are robbed of opportunities to land a job, acquire valuable training and experience, and demonstrate their worth to employers.

3. Renounce the grossly misnamed Employee Free Choice Act. This legislation, currently before Congress, threatens to stack the deck against employers in the union certification process. Current law requires a secret ballot election among workers when the employer opposes union certification. If the union wins majority support, the National Labor Relations Board certifies the union as the exclusive workplace representative in collective bargaining with the employer.

4. Experiment with how best to put the unemployed back to work and assess the results. Government agencies and community organizations have tried many programs to help the unemployed return to work. Some programs focus on job search assistance and interviewing skills. Others provide counseling about education and training opportunities. Yet others rely on re-employment bonuses for job losers or financial inducements to hire the unemployed. There is much potential to learn from these programs about which approaches are cost effective, and which are not.

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8 Responses to “How to Create Jobs”


  1. 1 David Perez October 18, 2009 at 5:28 PM

    Stephen Davis has some very good points in his ideas on creating jobs, but I do agree with some of his ideas. I will break it down by each number. To begin, I think that number one is entirely true. Health benefits are one of the main costs that employers must set aside for fellow employees. I am glad that he is not going for a socialist approach to lower the health mandate, but rather letting governments undo harmful effects by repealing the costly benefit mandates.
    On the other side, I do not agree with suspending the federal minimum wage. There is a reason that we have a minimum wage in this country. It helps provide miniscule incomes to various types of people, and keeps otherwise low skilled workers away from businesses. Why would Davis want to take away the federal minimum wage? The next time you would go to your favorite restaurant, you would suffer bad service. So it is important that businesses focus on capital-intensive production methods, skilled workers and self-service by customers.
    The last two points presented by Davis are also subject to debate. There is alot of workers who would definitley disagree with those ideas of him. Nonetheless, I think we should adopt some of his points into a new national agenda.

  2. 2 Jorge Clavijo October 22, 2009 at 6:59 PM

    I totally agree with all ideas given by Stephen Davis on the article, “How to create jobs.” I believe that a good way to find new jobs for a society is by supporting more those schools in low-incomes towns. If our government offer more help to our education field in our society, then I am sure that we will be able to create more leaders of tomorrow, whom we will rely on them since they will put their ideas into reality.

  3. 3 Kathryn Koller November 30, 2009 at 8:15 PM

    I like all of Stephen Davis’ ideas for creating jobs. They all seem fairly simple and are definitely good places to start. The last one about focusing more on getting the unemployed into programs that teach them about getting jobs is my favorite. I can see it being very useful information that not everyone knows. And it’s great how he wants to use some of the unemployment money to pay for some of these programs so then these programs wouldn’t be another cost burden that people have to worry about. I sometimes get worried that people milk the unemployment benefits and going the way of programs and making them necessary to continue to get benefits is a great way to get people back out there looking for jobs.

  4. 4 Josh Highness December 8, 2009 at 1:54 PM

    I really enjoyed this article and I do have to agree with all the points that were made. The second recommendation he made however can be quite questionable since minimum wage was put into place to stop from underpaying employees but I do agree that this drives away those who lack the necessary skills that they would obtain from a low-paying job at a restaurant for example. No one wants to overpay a part time dish washer.

  5. 5 Britany Linton December 8, 2009 at 5:57 PM

    I agree with all the above comments and the article. These are great ideas to create more jobs and some great points were brought up. I think some of these are a little unreasonable and will be hard to attain but these are good ideas and get me thinking about more ways we can decrease unemployment and increase the amount of workers.

  6. 6 Kyle Ray December 9, 2009 at 1:11 AM

    I disagree with most of what Davis is saying, except for #4. Then again, #4 is not so much an opinion but an acknowledgement of a lacking in knowledge. Lowering minimum wage might lower unemployment but it will also lower the standard of living for the poorest people in the state. Combined with cutting back on medical expenses these steps just seem to shit all over the poorest people in the economy. I didn’t quite understand the third point, but it seems to want to get rid of a certain type of union? I don’t know why he even cares about that after taking away the wages and medical coverage… what more could a union ask for?

  7. 7 Melissa Alexander December 10, 2009 at 6:59 AM

    I think it’s great that Stephen Davis has ideas to help get us out of this rut we are in whether his ideas are good or not. Everyone’s opinion varies, but I believe they would work. However, I don’t think it would be ideal for all of this to happen, and who knows where it would end up…but more people would definately be employed…the problem is….taking so many things away from the employed only makes it easier to stay unemployed.

  8. 8 Taylor Smith December 12, 2009 at 5:27 PM

    I agree that this would be a great way to create jobs and lower the rising unemployment. I do think that this is a reach and would be very hard to actually have happen. The changing of minimum wage I do not think would be the best. It would be great to have more jobs, but if the new jobs are all underpaid there is still going to be a problem.


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