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As unemployment climbs, some analysts call for new job-creation measures
MARKETWATCH

WASHINGTON — With the jobless rate shooting above 10 percent in October, many analysts are beginning to think that Congress could do more to spur job growth.

Some are calling for a return to job-creation measures that haven't been seen since the 1970s.

Robert LaLonde, a labor economist at the University of Chicago, said the weak labor market requires "several different approaches," especially a new jobs program for workers with no college education.

Prior to the latest October data, the unemployment rate for high school dropouts stood at around 17 percent, compared with a 4.5 percent rate for college graduates.


These workers are "very vulnerable" and likely to be unemployed for a lengthy period, LaLonde said.

He suggested that Congress consider returning to the job-training program of the 1970s called the Comprehensive Employment and Training Act, or CETA. The program was aimed at low-income workers.

"The market will take care of high-skilled workers," LaLonde said.

But Douglas Holtz-Eakin, an economic adviser to Sen. John McCain during the last presidential election, said there are "no easy dollars" in Washington to fund a jobs program.

"There is nothing you can do that substitutes for a growing economy," he said.

Holtz-Eakin said he would support measures aimed at lowering the cost of hiring workers.

Any move to fund a jobs program would quickly run into an ideological struggle.

J.D. Foster, a senior fellow at the conservative Heritage Foundation, dismissed suggestions for a new jobs program.

The proper response to the weak labor market was "the less government, the better," he said.

"If the government spends a billion to hire workers, that only means we're taking it out of the private economy," Foster said.

But Ron Blackwell, the chief economist at the AFL-CIO, supported a new CETA program.

He said the program should be aimed at rebuilding the economy's infrastructure.

"We would rebuild the country's competitiveness and at the same time get people the skills they need to succeed," Blackwell said.

Blackwell also suggested a wage-sharing plan, modeled on successful programs in Europe, where workers agree to take fewer hours and the government tops their pay. This is designed to lower the chances of layoffs.

Holtz-Eakin said a wage-sharing plan would be hard to manage.

A company may just try to get government assistance to avoid layoffs that were never actually planned, he said.

Foster of the Heritage Foundation was even more dismissive.

"Exactly how many jobs is the AFL-CIO trying to destroy?" he asked. The program amounted to welfare for union workers, he said.

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