The U.S. jobs market is broken. The causes of the breakdown are readily identifiable, and there are simple cures that would go a long way towards fixing them without undermining the general benefits of a free market. Further, they do not require "Big Government" interference, but rather just some simple common sense changes to address basic problems.

There is plenty of data showing that the growth in the U.S. economy over the last 30 years has flowed almost exclusively to the top few percent of the population. That is inefficient. Our growth is limited primarily by consumer demand. The wealthy do not spend all of their money, or even close to it. The middle class and working class, on the other hand, pretty much spend what they get. An American economy with income concentrated at the top has less consumer demand, and so less growth and strength, that an economy with better income distribution

It's hard to believe that the top 1% of the population really drives all the value creation in our economy. I am good at my job, but I couldn't do much without the 43 other people who report to me. Special talent is important and logically commands a premium. But special talent does not explain the skewed distribution of income in America today. Something is wrong.

It's not hard to figure out where the problem lies. Despite having a relatively high employment rate, and certain fields that are going begging for employees, we have an effective oversupply of labor. This flows from several sources. The increase in women entering the workforce, whether voluntarily or out of perceived economic necessity, has added competition. Increases in employee productivity through automation or just working people harder has increased supply. But layered on top of these developments are the effects of globalization, which hit on two levels.

At the low end of the spectrum, we have had the huge influx of unskilled immigrants, mostly illegal, desperate for even minimum wage or lower work. Defenders say that they do the work
'that Americans are unwilling to do," but this is just code for saying that such immigrants can be hired for a wage that Americans are unwilling to accept. But this undercuts the market power of unskilled Americans. There will always be someone willing to take that unskilled job for minimum wage or less, so why should an employer pay more?

This problem is greatly aggravated by the other side of globalization, job export. The tradition blunt instrument that America uses to deal with over-competition among unskilled workers is minimum wage laws. The problem with such legislation is that it fails to distinguish between two very different classes of jobs -- mobile and inherently local. Many jobs, such as manufacturing or any type of service than can be provided over the internet, are mobile. If the government raises the minimum wage for those, they really do move to some other country where wages are lower, assuming that labor costs are a major concern for the employer. The result of this is that minimum wage tends to become target wage for mobile jobs.

There are many jobs that are inherently local. Minimum wage laws work for such jobs, within limits, because they cannot be shipped away. But with competition from unskilled immigrants and from unskilled Americans who have lost jobs in mobile industries, it becomes difficult to drive wage increases in these jobs above the statutory minimum. And, again, because raising the minimum for mobile jobs creates more unemployed workers, minimum wage tends to become target wage for the unskilled segment of these inherently local jobs as well.

OK, but we have all be told that globalization was going to fix this problem by replacing the low-skill, low-wage jobs exported to developing countries with high-wage, high skill jobs here in America. We're told that all the U.S. employees who lose jobs will get new training and move happily up the scale. But that's not happening for the most part. Why? That brings us to the second flaw.

The U.S. tax system pushes corporations -- the primary source of high paying jobs -- to move their best operations abroad. U.S. law currently provides that most income earned abroad is only taxed by the U.S. when you bring the cash home. So, if you make $100 in America you only keep $65 after the U.S. 35% corporate tax, but you keep the full $100 if you earn it in the Dominican Republic. When you reinvest that $100 of D.R. cash you can use the full $100 if you invest abroad, but only $65 if you invest in America, due to the U.S. tax bite. So you invest in new foreign operations, not American ones. This effect is strongest for the highest value operations, because they have the highest taxable profit margins. The U.S. became a net importer of high technology goods for the first time in 2002, and that deficit has increased each year since. So, the set of operations that would NOT more jobs abroad to chase cheap labor -- the operations that have a high profit ratio relative to labor costs -- flee abroad for tax reasons, and once they flee they become subject to an addictive need to reinvest their earnings outside of America.

This is not a theoretical problem. I am the head of tax for a large U.S. multinational. It is my job to advise that high value manufacturing and research should, from a tax point of view, be located outside of this country. I advise that it is better to invest cash in foreign operations than in American ones. I don't like giving that advice, but under current law that's what the numbers dictate. I want to change that.

Now factor in the other issues in our economy. The government is already running a huge deficit, low interest rates and the falling dollar are causing the foreign investors who have been propping up our credit markets to start pulling out, the phantom consumer funds from unsustainable mortgage debts are gone -- we're out of gas on government stimulus. If middle class wages have been struggling to rise in good times, what will they do as our consumer economy fades?

So what's the cure? Start with the Shared Economic Growth proposal, explained in detail with lots more background at www.sharedeconomicgrowth.org . Shared Economic Growth would allow corporations a deduction for the dividends they pay out, but otherwise would leave the current corporate tax in place at current rates. This means that corporate operations conducted in the U.S. could be effectively tax free, creating a huge incentive to move high value operations to America. This would overnight become the best place to conduct R&D, headquarters operations, high tech manufacturing, and everything else that tends to provide high value jobs. As corporations responded to those incentives, they would need to hire employees. This would give employees market power, effectively eliminating foreign competitive pressure until U.S. wages reached an equilibrium level offsetting the tax benefit of being here.

Since corporations currently hoard most of their cash, if they instead maximized this tax benefit (as their shareholders would surely press them to do) the proposal would be largely self funding, since the incremental dividends would be taxed at the individual level. Some extra offset would be needed. My suggestions for those are explained at www.sharedeconomicgrowth.org .

That's it. Simple, easy to enact, easy to administer, doesn't open up new loopholes, but the benefit to America and American workers would be huge.

Proposal number two is on the immigration side. The argument that keeps being raised for not just stopping illegal immigration by really going after employers (you don't need a fence if illegal immigrants can't find a job -- they will just go home) is that America needs them to "do the jobs that Americans won't do." So, let's test that proposition by allowing guest workers for jobs (not requiring a college degree) where the sponsoring employer agrees to pay them at least three times the U.S. minimum wage. Employers would desperately try to recruit native-born Americans to replace the guest workers at this much higher target.

Shared Economic Growth and smart immigration would make a huge difference at a time when America really needs it, but neither one will happen unless people help to spread the work and force such proposals into the public conversation. Be part of that awakening to the possibilities for real, simple, effective change.

I have never understood why there is ANY discussion on rewarding illegals ?(who broke the law & provided MX wilh Billion)

All one has to do is add up cost of doing so (besides the obvious of reward for illegal) the cost for overload to: schools, public services,
hospitals, annual monies given to suppliment their income, spliting our one language per Country, disolving our culture & similiarities, lowest estimate PER YEARS 285 TRILLION. TO ME= THAT WOULD CANCEL ANY DISCUSSION.
BESIDES 83 % OF AMERICANS SAID NO!
NOTE: WE DO NOT NEED ANYMORE UNSKILLED WORKERS, WE NEED MORE SKILLED WORKERS FOR COMPANIES TO FUNCTION.

I can't believe that we ended up with 3 amnesty candidates.

Your faith in the democrats is naive given the past year. Your suggestion that dems bring up the immigration issue again to deflect from their intraparty presidential meltdown would only hurt both Senator Clinton and Senator Obama. They tout themselves as change candidates but their party is anything but so. It speaks volumes about their ability to secure an approval rating below President Bush's. I've lost count the number of times they introduced resolutions trying to end the war and leave the troops hanging out to dry. Such a tactic would be more of the same from tired old Washington and the liberal elites that run the Congress. If McCain sticks to his guns and agrees not to support such a measure again, opting instead to secure the border, your strategy would only make him look better. With the economy in tatters, our illegal immigration problem may end up solving itself. In any event, we should round them up and ship them out. Why should they skip to the head of the line?

It,s sad that these polititians all refuse to accept the consensus of the American people on this issue, it,s time for us to get our own house in order before we can accept another tide of immigration (legal or not). But this all goes back to politics as usual,"real" republicans love the cheap labor, and anti-union aspects of this. "real" democrats love the easy votes when they can legalize and make these people dependants. One day "maybe" American polititians will actually look out for Americans, and quit trying to govern the world.( feed America first) not your maid,s family

The only problem is that amnesty is so unpopular Democrats don't want to talk about it either. The only time Obama or Hillary talk about it is when they are pandering to a Hispanic group.

"[T]hrowing the immigration 'grenade' and stirring up the immigration storm in the GOP may make the Democrats bickering look pretty tame,"

How true! It�s as though important or relevant issues are used by politicians (on both sides) for leverage instead of making them a priority for the American public. The word �grenade� speaks volumes; I imagine a WWI trench scenario where the Democrats are simply waiting for the right opening to get their shot in. The bill wouldn�t be presented to further an issue or solve a problem, but instead to attack an enemy. I think this is the issue that will bring down McCain in the eyes of many independent voters. McCain�s strength to independents lies on his individuality and non-partisanship and showing that he�s willing to swip-swap on an issue as divisive as immigration will deflate the image his camp has carefully cultivated.

Klon J Waldrip

Cheap labor? Democrats own the labor unions and love those illegal workers and votes. Remember the vote on Amnesty more Democrats then Republicans voted for it. Its just as misleading as comparing the KKK to the Republican Party. Since the Democrat Party gave birth to the KKK. Fact check that. Sure the Republican Party isn't fiscally conservative and neither party wants to cut spending and aren't very wise about military actions. Although i would say LBJ a Democrat goofed when he escalated Vietnam for unknown reasons at a greater loss of life than Iraq in a shorter time frame.

Today! NOW! The danger is SEVERE! Let me remind you of the stakes in this fight against illegal immigration.
If it passes, this bill will GIVE AN AMNESTY to about 3 MILLION (MORE) Illegal Aliens agricultural workers and their families for five years (at least!). You the taxpayer will be paying for their medical care, schooling and much more; compliments of parasite employers and farmers. We already have 12 to 30 million in America already, that our humble pockets are paying for? Already hundreds of thousands of people have faxed messages of anger and frustration.
TOGETHER Citizens and Permanent residence can defeat this repugnant bill. Call toll-free (202-224-3121) Most newspapers are saying nothing. Read and Fax for free NUMBERSUSA Jam politicians switch boards!