How Do We Take the Next Step to True Recovery?

Our economy is unequivocally in better shape than it was a year ago: the S&P 500 and the Dow Jones Industrial Average have reached record highs, both increasing approximately 30 percent over the past twelve months. Initial estimates suggest that 2013 will have been the best year for job creation since 2005, as the economy added over 2 million jobs and the unemployment rate dropped by over 1 percentage point.

And consumer confidence has steadily increased, particularly as 401K’s and home values have swelled.

Considering the crisis from which the U.S. economy has emerged—from January 2008 to February 2010, 8.8 million jobs were lost, housing price levels plummeted 30–50%, and major stock indices plunged to nearly half their value—we are certainly making concrete progress.

In November, the labor report showed that the economy added 203,000 jobs, beating analyst expectations. Many took this as yet another sign of real progress. But consider this: if the economy were only to add 203,000 jobs per month moving forward, it would take the U.S. nearly five more years to return to pre-recession labor market conditions. And with December’s labor report initially showing gains of just 74,000 jobs (along with a surge of workers simply leaving the labor force), it looks like we may have a long journey ahead just to get back to where we were before the recession.

In the spirit of the new year, what one resolution should our national, state, and local leaders make to facilitate full economic recovery? Job creation. And in working toward this resolution, our leaders must balance smart, collaborative action with appropriate and deliberate restraint. Why? Because job creation doesn’t merely affect Americans’ employment status or income—it increases confidence and security, and improves social conditions. Job creation also directly impacts the housing market by lowering foreclosure rates and stimulating new building and buying. New jobs signal that U.S. companies are thriving, drive our stock markets and fuel our economic recovery.

As our leaders consider various pathways to spurring job creation, they must lay groundwork for the nation’s future by crafting policies that incent sustainable, responsible growth throughout all sectors of the economy. By ideating and collaborating with business and education leaders, America’s leaders must ensure that long-term job creation is unobstructed by unnecessary regulation or misplaced investment.

In particular, it is imperative that decision makers avoid the distracting allure of policies that generate rapid short-term growth in temporary or part-time positions, policies that encourage growth by merely plugging holes in the bureaucracy or expanding the size and scope of government, or policies that unnecessarily constrain the private sector in general, and small businesses in specific.

Too often, well-intentioned government leaders craft and enact policies that unfairly penalize growing small businesses, eliminate incentives for hard work, sacrifice and education, and repress competition by handicapping the playing field. Not only do these policies ultimately have a negative impact on job creation beyond the short-term, they also often fail to help or protect those for whom the policies were ostensibly developed.

We must remember that small businesses employ 50 percent of the working population in the U.S. and have accounted for over 65 percent of all new jobs since 1995; their role in job creation cannot be overstated. When small businesses have real capacity for growth and innovation uninhibited by burdensome and unnecessary regulations, our private sector thrives and our economy is better off in the long-term.

Ultimately, policies that negatively impact competition negatively impact our economy. And make no mistake— whether we encourage competition domestically or not, we will certainly experience it internationally, much to our demise if we don’t allow our private sector to lead the way in growing and innovating. We need our leaders to focus on enacting policies that nurture America’s resilience and entrepreneurial spirit, which comprise the very fabric of our society and positioned our economy as the strongest in history. To enable a true recovery from the recent recession and put 11 million unemployed Americans back to work in sustainable, productive jobs, let’s turn our focus to creating jobs cultivated by a healthy free market in 2014.

This post is part of an ongoing series of data-driven commentary on current events. It was originally published in the Zion’s Bank Economic Outlook Newsletter and the Deseret News.