Dreman: Bernanke Stuck in the Past on Jobs

David Dreman says U.S. policymakers are approaching the employment problem with antiquated views, and policies that aren’t addressing the real issues with job creation.

In his latest Forbes colunn, Dreman says that Fed Chairman Ben Bernanke “is fighting the monetary woes of the 1930s,” a period in which domestic stimulus led directly to increased domestic employment. “Our current employment problem is different,” Dreman says. “We currently export our jobs to lower-wage nations like India, China and the Asian Tigers. After all, the average wage in India is roughly 40 cents an hour, and in China it’s about $2. Here in the U.S. the average hourly wage is $20 plus $1.24 in Social Security tax.”

“Add it all up and an engineer in Bangalore costs $12,000 a year compared with $90,000 in the U.S.,” he says. “This big problem will haunt our employment market for the foreseeable future.”

The problem is compounded, Dreman says, by the fact that many countries are not free traders, and by China’s thriving counterfeit merchandise business. “America, with the exception of oil, is almost entirely self-sufficient,” he writes. “By bargaining more aggressively with China and other neomercantilists and changing tax laws to reward companies that create jobs at home, we can recover from the employment hole we’re now in.”

Dreman says the fact that we’re approaching an election should spur Congress to act, and he thinks dividend-paying stocks will benefit. He offers three picks, including Altria Group.