A new study released today by the Private Equity Council is offering the incoming Obama administration and new Congress an outline to improve the U.S.’s failing productivity by making the country and its workforce more competitive with other countries.

The study was authored by Martin Baily, chairman of the White House Council of Economic Advisers (CEA) during the second Clinton administration, and Matthew Slaughter, associate dean and professor of international economics at the Tuck School of Business at Dartmouth College and a CEA member during the second George W. Bush administration.

According to the “Strengthening U.S. Competitiveness in the Global Economy” study, the U.S. has experienced a significant decline in productivity since 2002, which was recently exacerbated by the financial crisis and economic recession. As a solution, Baily and Slaughter identified trade, education, public infrastructure, and fiscal policy, as key areas lawmakers can address to reverse the decline.

“By taking steps today to improve upon our existing economic strengths, we will not only weather the current financial storm but also lay the groundwork for countering the competitive threats that, left unaddressed, will harm our economy,” Slaughter says.

Workforce suggestions for the new administration include wage-loss insurance for workers 45 and older; continued health insurance coverage while workers remain eligible for unemployment insurance; expanded federal training programs; and expanded tax preferences to encourage skills acquisition.

“We regard current U.S. labor-market programs as well intentioned but, because of their design, inadequate to cope with widening labor-market pressures,” the study reports. “As such, they do not adequately support on-the-job development and retention of skills for the American worker.”

In addition, the authors suggest offering high school students incentives—including financial ones—for graduating and providing them with adult role models.

In terms of trade, the study urges continued liberalization of international trade and investment while also encouraging effective regulation of the financial sector.

Baily and Slaughter also emphasized the need for a bipartisan presidential commission to figure out how to efficiently collect tax revenue and achieve a balanced budget.

To read the study in its entirety click here.

–Blair Chancey