As most Americans return to work following vacations around the Fourth of July holiday, so the nation's political class also returns to their jobs, following majority leader Harry Reid's cancelling of the Senate's scheduled Independence Day recess. Top of the agenda will be negotiations to avoid a crisis over the nation's debt ceiling. But another issue should also top the agenda: the sluggish U.S. jobs recovery.

The labor market has stalled again in recent months, while the debate over what to do about jobs has long been caught in a political cul-de-sac.

The traditional economic tools of the right and left - tax cuts and government spending - have failed to offer much relief in a time when the economy is global, capital is mobile and a few extra dollars in a family's bank account can go to purchase Chinese-made televisions and clothes at Wal-Mart.

Injecting more money into the economy might have worked when we lived in a national, as opposed to a globalized, economy; when big businesses created most jobs; and when the paradigmatic workplace was the regimented assembly line.

But America and other modern economies have entered what might be called the "new work order" - an economy where most workers are untethered from large institutions and bouncing from one job to the next.

In this economy, each worker is, in effect, their own small business - responsible for guiding their own career and economic future.

Although advocates of the top-down approaches of helping big companies or expanding big government may not realize it, we live in a bottom-up economy: today's job creators are less likely to be industrialists throwing up factories than to be laid-off workers firing up their laptops in a Starbucks.

Research has shown that during the past generation, start-ups less than five years old have accounted for all net job growth in the U.S.

The current challenge is that the recent economic slowdown is directly tied to a very real entrepreneurial slowdown.

The number of new businesses with employees fell by more than 17 percent between 2007 and 2009. The number of new employer companies in 2009 was at its lowest level since 1992.

Self-employment rates have been falling in the past couple of years, even while a study this year from the Small Business Administration demonstrated that 65 percent of the jobs created by start-ups between 1997 and 2008 were jobs that entrepreneurs created for themselves. As the study's author put it: "Business creation is job creation."

So it is on entrepreneurs, often an afterthought in the conventional jobs discussion, that the nation should focus. Revitalizing entrepreneurship should start with a tax holiday for new businesses that is directly tied to the number of jobs they create.

Health care and retirement benefits should be more universal, personalized, affordable and portable so that entrepreneurs have a greater ability to walk away from big companies and strike out on their own.

More states should follow the lead of places such as New Jersey and Oregon, which have started to modernize unemployment benefits so that they not only cushion the blow for laid-off workers but also encourage and enable them to find better jobs and create new ones for themselves and others.

The Obama administration's Startup America public-private partnership should be expanded so that businesses can be started with the kind of urgency and resources the federal government used to bail out failed corporations.

It is worthy and important to have a debate about whether corporate tax reductions and regulatory relief, or high-speed trains and smart grids, will do more to make the U.S. internationally competitive.

But in this "new work order" the gaping hole in the economic conversation is an agenda for making Americans more personally competitive. A sense of energy and urgency behind that goal is long overdue if the economy is to be turned around.

Understanding and grappling with this transformed economy is the first step on a road to recovery. The immediate cause of the Great Recession, like the Great Depression 80 years earlier, may have been a culture of excess and irresponsibility from Main Street to Wall Street, but the solution will only come by doing for this time what the New Deal eventually did in the 1930s: updating economic policies to respond to a new world.

• Andrei Cherny is chairman of the Arizona Democratic Party and the founder and president of Democracy: A Journal of Ideas. He is also a senior fellow at the Center for American Progress and former Arizona Assistant Attorney General, White House aide, and business consultant.

(1) comment


Nicely written, generates lots of warm and fuzzy feelings. Only one problem, start-ups don't generate many jobs right away. Even when they do start hiring, it's employees with high tech skills, not the masses of the so-called working class. I should know, I'm presently involved in a start-up. No one is presently taking a salary, and to avoid being crushed by Obama, we're incorporated in Hong Kong, and all our manufacturing will be in mainland China [innocent]

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