America has a two-dimensional jobs crisis. It faces as persistent jobs deficit — the economy is not producing enough jobs to recoup those lost in the Great Recession — and the quality of jobs as measured by wages, benefits, and job satisfaction has been declining for many years.Yet the government is paralyzed. Nothing is being done to address this crisis, and it appears government is incapable of doing anything significant any time soon. A different approach is needed. In this working paper I attribute the root causes of the crisis to a market failure and an institutional failure. Individual employers do not have an incentive to create jobs in the U.S., but the overall business community does need healthy growth in good-paying jobs. Normally a market failure such as this can be overcome by coordinating the individual parties in some way. Government, labor, or even the business community acting at the association or sector levels might play this coordinating role. But America also suffers from an institutional failure — there is no constructive dialog at the aggregate business community level or across the business, education, and labor communities needed to overcome this market failure. I propose creating a Jobs Compact with a concrete goal — create 20 million high quality jobs by 2020. This is the number of new jobs the President's Jobs and Competitiveness Council estimates we need to close the jobs deficit by the end of this decade. I suggest universities in general and business schools in particular take the lead in bringing these parties together to negotiate specific provisions of a 20-20 Jobs Compact and to commit to concrete steps needed to reach this goal. I welcome comments and suggestions on how to make this happen.
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