For the last few months, the Obama White House has focused its attention on health care, and for good reason: Rising medical expenditures really do threaten to cripple the federal government and crowd out the investment we need to build a flourishing economy.

Though I don't think the president's approach is the right one, he deserves our applause for taking the issue seriously, as evidenced by his thoughtful remarks on the drivers of cost growth during last week's press conference. But over the same period, the policies pursued by the Obama administration have arguably exacerbated an even more serious problem: the ongoing jobs crisis.

Since the start of the recession, unemployment has risen far more rapidly than one would expect from the state of gross domestic product. According to economist Casey Mulligan of the University of Chicago, a number of recent policy initiatives have introduced significant work disincentives. The completely inexplicable minimum wage hike that went into effect this week is only the most egregious example, one that will likely exclude large numbers of young people and ex-offenders and less-skilled workers from the mainstream economy. Mulligan also points to the perverse consequences of means-tested student loan forgiveness and mortgage modification.

Both measures are designed to ease the burden of carrying debt for those facing economic distress, which is very appealing. But these measures effectively raise marginal taxes. As it turns out, Congressional Democrats have also called for raising marginal taxes the old-fashioned way. Taken together, this haphazard agenda amounts to an anti-stimulus plan.

But the jobs crisis didn't start with this recession. From 1948 to 2005, labor force participation in the United States increased from 59% to 66%, a modest bump that conceals dramatic social change. For women, labor force participation went from 32% to 59% and for men it plummeted to 73% from 87%. The sharp increase in female labor force participation has been a tremendous economic boon, yet its effects have been blunted by the rising number of male economic dropouts. Suffice to say, this turn away from the labor force hasn't impacted all American men equally. For much of this period, men over the age of 55 withdrew from the workforce; since the late 1990s, however, that trend has reversed, perhaps due to the decline in private pensions and improvements in health and in workplace safety.

Over the long term, this is very good news: The longer you work, the longer you're likely to live. If anything, we should encourage this trend by, say, exempting over-65 workers from Social Security payroll taxes and by offering more generous public pensions to workers who retire later in life. In recent months, there has been a spike in early retirements, most likely as a means of easing the economic pain of layoffs. One hopes that this is only temporary.

At the same time, labor force participation by prime age males has also decreased. As Mulligan's Chicago colleague Kevin Murphy has observed, less-skilled workers have tended to withdraw as demand for their services has decreased; at the same time, disability benefits allowed a growing number of these workers to live in dignity without a job. One way of thinking about this phenomenon is that the economic transition to a post-industrial economy has left a disturbingly large number of workers with no option other than to rely on the state or to turn to the underground economy--or, in many cases, to do both. Adapting to new economic circumstances requires resources, particularly cultural resources. Among less-skilled men, those with intact families and noncognitive skills have a distinct advantage.

And now, as we go through yet another wrenching transition, these cultural resources will become even more valuable. The end result could be yet another step increase in the number of workers left out of the economic mainstream. And economic exclusion breeds more economic exclusion, as long stretches spent in the economic underground or, worse still, in prison make it extremely difficult for even the hardest workers to claw their way into the middle class.

Worklessness, like homelessness, has plagued our inner cities for decades, as Harvard sociologist William Julius Wilson brilliantly outlined in When Work Disappears. But it has long since spread to exurbs and small towns ravaged by crime and despair, and it will spread further still if we don't take action. For all the talk of green jobs, we really don't know what the next American economy will look like. We do know, however, that creating a genuinely inclusive economy will be extremely difficult, and it will require concessions from the left and the right. The left needs to abandon soak-the-rich income tax hikes in favor of broad-based consumption taxes, a case Forbes columnist Bruce Bartlett has been making for years. The right should embrace low-wage employment subsidies, like those proposed by Columbia economist Edmund Phelps, as a means of guaranteeing that a free enterprise economy works for all Americans.

To be crudely political for a moment, it is difficult to imagine President Obama reversing course. For all his political pragmatism, Obama is a deep believer in social democratic measures like minimum wages and other costly labor protections, which tend to raise unemployment and non-employment. In 1992, Bill Clinton promised to "focus like a laser beam on the economy." For a number of perfectly good reasons, the Obama White House has focused like a laser beam on passing a scattershot stimulus package, expanding eligibility for Medicaid, creating health insurance exchanges, making the case for cap-and-trade, and, of course, tamping down the financial crisis.

The opposition thus has an opportunity to focus like a laser beam on jobs. Just as the Iraq War united progressives against President Bush, the jobs crisis could be the issue that galvanizes conservatives. During the Bush years, the right appeared to be maddeningly indifferent to the long-term challenges facing the U.S. economy, ranging from wage stagnation to rising health care costs to creaking infrastructure to government overspending, and moderate and independent voters responded rather predictably. By crafting effective policies designed to get the country working again, the conservatives will win the center--and more to the point, they will deserve it.