Jobz R U.S. -- Not!
Why isn't the U.S. economy producing more jobs?
This nagging, festering, frustrating question has been weighing on the market, and the American psyche, for several years now -- but it was front and center this week, given that we're supposed to be entering the second year of a recovery.
The short, economical answer is, America doesn't have powerful enough economic growth to produce new jobs. The most recent snapshot had total output rising by 1.8 percent. That's not enough to send firms rushing out to hire people. In fact, in the long run you need 2.5 percent to 3 percent growth just to keep unemployment steady. To make real progress, with population growth and productivity gains, you need 4 percent, 5 percent growth and better to really see that unemployment figure fall rapidly.
Right now there are companies willing to hire, and companies that are not. But there are almost no companies that are eager, hungry, desperate to hire people, because sales are booming and they know that the talent they don't acquire may wind up going to a competitor. It wasn't so many years ago that companies in Silicon Valley were in that kind of mad, frantic scramble for people... first to make chips, then to build web sites. That feel is just not there in this economy.0
Some people offer a policy critiques or solutions, and there is a grain of truth in almost all of them.
"The population is too big." Maybe we need stringent birth control, like China had in the 1960s and 1970s. Ehhh... the real Chinese takeoff started when Deng Xiaoping allowed a private economy to flourish. In the coming years, in fact, China will face a severe demographic problem; like Europe, it has had sub-replacement-fertility rates for so long that more than half the population will be older than 65. The U.S. is in something of a sweet spot, having not gone as far as China and Europe, but not sitting at the other extreme of many developing countries that can't educate, or even feed, its teeming masses of children.
A variant of this Malthusian analysis suggests it is not the total U.S. population, but the composition, that's a problem. "Too many Asians and Mexicans. Time to slap up a couple thousand miles of barbed wire. Maybe mine the harbors too." There have been all sorts of studies of the immigrants-take-jobs hypothesis over the years, and there will no doubt be more.
But whatever the impact of immigrants is in terms of their "consumption" of jobs, there's another side of the balance sheet that seldom gets considered: Their impact on supply. To some extent, immigrants also "produce" jobs. According to one study, immigrants and refugees generate patents at significantly higher rates than their U.S.-born counterparts; they start new businesses; help U.S. companies build export markets; collaborate in new products; and on and on.
Too many people "not born here"? Really? In a multicultural, global economy, maybe we don't have enough.
The list goes on and on. We don't spend enough on education -- or, alternatively, we spend way too much, and spend it very badly. We need a bigger capital gains differential, because "capital" makes for "jobs" -- or, alternatively, we need a smaller capital gains differential, and lower income tax rates, because, in fact, many jobs are generated by small business owners who are getting pummeled by the tax code's punishment of human labor and development as opposed to physical capital or corporate "persons." As Lincoln observed, if there were no people, "capital" would not exist.
For my money, all these arguments have some merit, but there is something else.
I wonder if we are undermining job creation by thinking of "jobs" in the wrong way ab initio.
We have come to think of a job as a thing -- a commodity. We need "more jobs." My son is trying to "get" a job. Hopefully my sister will be able to "find" a job. Where are the jobs? Are they over there, in a corner? Hiding behind the bush? The little buggers -- they must be around here somewhere. We better round some of these jobs up before someone else "takes" them.
When you think about the phrase "job creation," by contrast, there's another part to it besides "job." I mean, the second half: "creation."
Focusing on that word creation not only humanizes the discussion. It focuses on what we want to do, as opposed to the static world of what we want.
Manifestly, not everyone who has tried has been able to find, or get "a job." But almost anyone can create one.
Some will do this by starting up their own eBay (EBAY) store. Some will cut their neighbor's hair, and then another neighbor's.
Some will march in the door, as a young executive did at Starbuck's (SBUX) many years ago, and say, "you guys shouldn't just be selling coffee beans to stores; you should have your own coffee shops." Some will make like Bill McGowan, and offer to work as a kind of volunteer-CEO of a company with almost no existing sales or products, but the rights to a lawsuit against AT & T. (He was the man who made MCI famous... and in his way, an architect of a revolution that continues today on your iPhone.)
I know, I know, it sounds trite. Sure, we can all go out and sell apples on the street corner. We just can't make much money at it if everyone is doing that. And some people just don't have it in them to convince some big company to add a new position to accommodate them.
But there is a view investments, and a view of the world, that suggests you get out of something what you want from it -- what you put into it -- what you demand from it. That your whole environment is, in a way, created in large part by your mental activity.
Building, hustling, selling, initiating -- in a word, creating -- adding value for someone else, and then capturing a portion of it....
It's a tough job, but somebody has to do it.
Ownership disclosure: At the time this product was published or posted, Damon Vickers & Co. and Nine Points Capital Partners owned no shares of eBay (EBAY) or Starbuck's (SBUX); these entities were neither long nor short either stock.
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