With jobs lagging, what is the solution?

Manufacturing engineer Douglas Yuen (standing, left) giving Labor Secretary Hilda L. Solis a tour of the assembly floor at Princeton Tectonics Inc. in Bordentown last month.
Manufacturing engineer Douglas Yuen (standing, left) giving Labor Secretary Hilda L. Solis a tour of the assembly floor at Princeton Tectonics Inc. in Bordentown last month. (TOM GRALISH / Staff)
Posted: October 22, 2012

Maybe it was pure coincidence, but factory worker Betty Jo Durham chose the perfect accessory on the day the U.S. labor secretary visited Durham's company to talk about President Obama's plan to bring manufacturing jobs back to the United States.

"We need to see the economy growing here in America and we need to create more jobs," said Durham, 46, sporting a red-white-and-blue flag bandanna as she assembled headlamp parts at Princeton Tectonic's Burlington County factory in Bordentown.

Durham has her finger precisely on the pulse of the American voter as the presidential election nears.

In every poll, voters list jobs and the economy as their top concerns. So said nearly half those surveyed in an Inquirer Pennsylvania Poll. The candidates agree. Debating Tuesday, they said job or jobs more than 100 times.

Republican candidate Mitt Romney promises to cut corporate taxes to 25 percent, ease regulations, and cut government spending. He said he'll restructure the tax system for U.S. companies doing business abroad so they'll pay taxes where they earn them.

A key goal, he wrote in his 160-page "Plan for Jobs and Economic Growth" is to sanction China for unfair trade practices, including assessing duties on Chinese imports.

Both men say they'll push for energy independence, evaluate regulations, and streamline government's role.

Obama, who also wants a corporate tax cut to 28 percent and 25 percent for manufacturers, laid out his job plans last year in his proposed American Jobs Act. It calls for payroll tax cuts of $65 billion, mainly aimed at small business, and payroll tax holidays for companies that add hires.

The legislation, which Republicans blocked, directs $35 billion to be spent to retain teachers, police, and firefighters, $50 billion for road, rail, and aviation upgrades, and tax credits for firms hiring the long-term unemployed. Some $49 billion would fund extensions of jobless benefits. Separate bills propose investments in schools, basic research, and advanced manufacturing.

The American Jobs Act measures will be funded, Obama said, by raising taxes on people earning more than $250,000 a year and by closing corporate tax loopholes.

Little wonder jobs are so important to voters.

In late 2007, the nation slid into one of its worst economic periods since the Depression. Because employment trends usually lag behind the economy, real job loss accelerated just as Obama took office in 2009. By then, 12 million were out of work and the unemployment rate was 7.8 percent.

Though the recession "officially" ended in 2009, the misery did not. The unemployment rate hit 10 percent that fall; the number of jobless reached 15.2 million in April 2010, before declining.

Last month, the rate finally fell back to 7.8 percent and the number of unemployed is just a tad higher than it was when Obama took office.

The latest Philadelphia area data, for August, puts unemployment here at 9 percent, up slightly from a year ago.

Did Obama react correctly to abate job loss? Supporters of his $787 billion stimulus act, such as Mark Zandi, chief economist of Moody's Analytics in West Chester, say the act staved off a full-blown depression, rescuing the nation from economic troubles that weren't Obama's fault.

"I don't blame Obama for the economy. I think he was dealt," agreed Brian Delaney, a Republican and laid-off money manager from Lionville in Chester County.

A member of Joseph's People, a support group for the jobless in Downingtown, Delaney counts on dividends from investments to "keep a roof over my head" - but he needs food stamps to eat.

He'll vote for Obama. "He's got a focus on the economy. I don't think Romney understands the economy."

Detractors say the stimulus was a waste of money.

Among them is Reynold "Rey" Forgione, another Joseph's People member and the first Republican in a mostly Democratic blue-collar family. A construction manager who once routinely ran major school construction jobs, Forgione now oversees the occasional job, in between stocking groceries at Wegmans.

Forgione, a father of four from Exton, said stimulus money should have gone to business owners like him. That would have created jobs.

But it did, said Asher Raphael, a partner in Power Home Remodeling, a 1,200-worker firm in Chester.

When Obama took office, the company had 200-plus employees, but no one could afford Power's energy-efficient windows and insulated siding in the recession.

The stimulus, Raphael said, gave taxpayers a $400 tax credit in 2009 and 2010 for home energy upgrades. Instead of layoffs, Power grew to 500 employees in 2010. In turn, its increased orders saved jobs at the Philadelphia factory that manufactures the windows Power sells.

Raphael lauded the administration's emphasis on energy efficiency. "The Obama administration has helped our industry through tough times, and I'm very confident that if we stay on course, we'll continue to grow," he said.

To be sure, the president himself cannot create jobs.

In the short run, he can use government buying power to purchase weapons or repair bridges, said William Stull, head of Temple University's economics department.

But long term, "the president can advocate and push for policies that create jobs, but he will be constrained by political differences with Congress and more general concerns about future taxes and interest payments," he said.

Romney says his policies will pave the way for 12 million jobs over four years. Zandi and another local economist, Joel Naroff of Naroff Economic Advisers in Bucks County, say the economy will generate those jobs anyway.

Zandi said that even in a slow recovery, the economy has managed to add 1.8 million jobs yearly. As housing and construction improve, that recovery should produce at least another million per year, bringing the total close to 12 million over the next four years, he estimates.

But University of Maryland economist Peter Morici says the 12 million will only happen under Romney - because of the business community's confidence in him, and because he'll be more likely to get out of business' way. Morici predicts job growth will barely top six million if Obama's policies continue.

Why? Because "there's no enthusiasm for making money," answers Republican Tom Danzi, of Suburban Collision Specialists in Glenolden.

"There's an assault on successful business," he said, explaining why he and his wife, Debbie, will vote for Romney.

The couple started their shop in 1978, hocking their house and maxing their credit cards to build it into a business with 18 employees.

Hard times have been tough on their trade - many drivers figure a fender-bender or two isn't worth repairing.

Even if things pick up, a new threat looms. Federal rules now mandate that the clear coat sprayed on oil-based car paint must be water-soluble.

Danzi agrees that the water-based finish is better for the environment, but said the technology hasn't developed far enough for effective reengineering of his company's $150,000 paint apparatus.

The machine can handle five cars daily, but water-based finish takes longer to dry, cutting production to two cars a day - and requiring fewer workers.

So far, the Obama administration has been willing to delay the rule, but Danzi knows that won't last. He thinks Romney would give the industry more time to adapt.

Romney supporters Suzanne Hatfield and her husband, Kurt Shore, owners of D4 Creative, a Manayunk ad agency, dislike Obama's planned tax hike for those earning more than $250,000.

That's their category, partly because D4 is an "S Corporation," with its profits folded into the couple's income.

"We don't make money and stick it under a mattress," she said. "We hire more people, buy more equipment."

If the agency earns a $1 million profit, she said, the couple's taxes will go up $70,000 under Obama's plan. That equals two employees.

In New Jersey last month, U.S. Labor Secretary Hilda L. Solis chose Princeton Tec, the headlamp company, to highlight Obama's push to return factory jobs to the United States.

At one point, 40 percent of the firm's manufacturing was handled in China; now, only 10 percent remains there.

Romney said he would launch a "territorial" tax approach. Critics contend this change, which would allow U.S. corporations to pay taxes where profits are earned rather than in the United States, would spur companies to put headquarters abroad, costing 800,000 jobs.

Even Romney worries about that, noting in his plan that the tax code must "be crafted in a way that does not encourage corporations to game the system and export jobs."

Under current policy, firms can deduct the cost of moving operations abroad. Obama has pledged to end that, instead giving companies a tax credit toward the expense of moving operations back - as Princeton Tec has done.

Factory worker Durham is glad to see the work in America. Still, she is not sure who will get her vote Nov. 6. "It's a tough choice."


Contact Jane M. Von Bergen at jvonbergen@phillynews.com, @JaneVonBergen on Twitter, or at 215-854-2769. Read her workplace blog at www.philly.com/jobbing .

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