Fighting the Beast of Unemployment: An Economic Boost is Needed
Repeat after me: there are no magic job wands.
Whether you believe there’s a talent war or not, there are still too many of us out of work. There are shortages of skills, a growing global competitiveness and industries with jobs that will most likely never be heard from again.
But buying into the fairy tale that [insert politician and/or political party of choice here] can and should be the magical job creator that will save us from ourselves only lends us false hope. Unfortunately we’re going to hear a lot of that rhetoric in the next 18 months.
This is just brings false hope that will be defaulted on time and time again. And listen, I’m a Keynesian, one who believes that when the private sector fails miserably – think Great Depression and our very recent economic ice age we’re still thawing from – the public sector needs to take monetary action to try and stabilize the financial markets and get folks back to work in the short term.
I’m not an economist, but I am an econ hobbyist who cares about tempering the beast of business’s destructive nature. Whether you agreed with it or not, short-term public stimulus can help spark long-term job growth if channeled at improving the infrastructure that makes it easier to conduct business in the US and beyond (think trains, planes and automobiles).
But that’s only part of the picture. You also have to have sustainable economic growth and incentives to invest in growing your talent base locally, virtually and globally. And if you have a sound business model, customers and sustainable growth, investors may come a-knockin’ to give you the capital you need to further grow, and maybe, just maybe, hire more talent.
On one of my recent trips across the US I caught up on one of my favorite podcast shows – NPR Planet Money. In one episode titled How do you create a job?, the hosts asked Princeton economist Orley Ashenfelter what he thinks when politicians say they created jobs:
I usually laugh. … When someone says that they are stating a fact: “While I was in office, employment increased by 150,000,” or whatever it increased by. Whether or not you can attribute that to what they did is another, much more difficult question…And by the way, you don’t often hear people say, “I destroyed 150 thousand jobs.”
The true bottom line here is that the government has to appeal to corporate greed. You have to incent business with lower taxes and/or improve the infrastructure in which we conduct business in order to stimulate job growth.
And even then there are no guarantees companies will start hiring. Many are sitting on mounds of cash, investing in stock buybacks, R&D or hiring outside of the US in emerging markets.
It’s called the marginal efficiency of investment – how much of a dollar you invest do you get to keep in profits. Businesses are not in the business of keeping people employed. They’re in the business of making money, and along the way they employ folks as a means to that end. But if you woo the beast, then maybe, just maybe they’ll start hiring, if the cost of paying someone to do a job is less than the output the job produces in revenue. Thankfully there is hiring happening in the US. Not enough to dramatically chip away at the unemployment rate, but it is happening.
I know this all sounds at odds from harmonizing workplace humanity I usually write about. It’s not, though. I’ve learned more about the economics of 21st century life in the past year to fill, well, a lifetime, and I’m a supporter of the Zero Unemployment movement (my recent rants with them were captured on video here and here).
There are no magic job wands. If there were, you know I’d be waving mine.
IMAGE VIA Nieve44/La Luz