Creating Jobs

My conclusion to my last post, i. e.,’ create more jobs’, is easily as facile as the comment that the unemployed should just ‘get a job’.  Obviously neither is easy otherwise we wouldn’t still be saying these things!  I’m no economist, nor am I a politician, but this is my take on the creating jobs situation.  I imagine employers are saying ‘why should we?’  After all they aren’t in business to employ people; instead they employ the people they need to successfully run their businesses.  And successful means creating a profit for themselves and their shareholders.  These days a lot of large corporations have a global presence with offices and projects and shareholders in many countries beyond America.  Patriotism isn’t necessarily a flag you can wave to get their attention.  In fact their diversification may be leaving them feeling either smug or concerned on for their business on both home and foreign fronts (not the best time to be in business in Greece is it?).

The weighs in with this:

The dirty secret of “job creating” is that there is no magic wand that will make employers hire again. All you can do is lower the cost of hiring and holding workers. Spain is doing this implicitly by lowering the cost of firing. The United States is trying to do this explicitly by cutting payroll taxes for new hires in 2010 and extending a host of small business tax cuts to free up capital that employers can put toward new workers. But contrary to the loud debate about how the government should create jobs, the government can’t actually create jobs in the private sector. That’s why it’s called the private sector, after all.

And since employers in many private sector industries took the opportunity created by recessionary belt-tightening to rid themselves of newly non-essential jobs just because there’s a bit of a recovery doesn’t mean those jobs will be coming back.  Some are gone for good (remember secretaries, filing clerks, even travel agents?) and others are outsourced to places with cheaper labor (have any of you called tech support or an airline recently?).  How could it be in the best interest of a company to spend money recreating those jobs here in America?

So if there are jobs to be created it will be because there’s an increase in demand for products and services and companies will need more workers to fill the demand or it will be because there are new industries springing up – think clean energy – that need employees.  The first will require that the American public has both more money to spend and more ‘consumer confidence’ so that they are willing to part with it.  Right now after several years of hardship it’s hard not to want to just tuck any extra money you have under your mattress instead of booking vacations or remodeling the kitchen!  And where will the American public get more money to spend when the recovery is still tepid at best?  I haven’t seen any data indicating salaries are on the rise, indeed there are still news stories of layoffs and pay cuts – especially in the public sector (see for instance San Francisco’s recent budget plan that cuts deficits by enacting what is essentially a 5% pay cut for city employees over the next 2 years).  And if you check the Mass Layoff Website you’ll see that even while the economy was ‘rebounding’ in April employers took 1,856 mass layoff (involving at least 50 persons) actions that resulted in the separation of 200,870 workers.  That’s not creating jobs.   As for new industries – well, any new industry will require some backers, some investment, and loans from banks.  None of that is easy to come by these days.  

The cost of continued unemployment isn’t the meager checks that come from unemployment insurance programs.  It’s the combined fiscal and human cost of millions of people who at best no longer have the discretionary income to purchase unnecessary consumer goods – upgrading their cell phone, or trading in their 3-year old car for a newer model,– who can’t afford to go on vacation, or eat out as often, or pay their child’s college tuition.  It is lessons foregone, maintenance deferred.  And those things have a ripple effect throughout the community.  The piano teacher or hair dresser or dog walker have fewer clients, and less money to pay their bills.  And for people who lived closer to the edge before losing their job or finding their business going under the cost is millions of people who can’t pay their mortgage (leading to more foreclosures, more abandoned homes, and more homeless families), pay their bills, afford medical care or feed their families. 

This is not news.  Community leaders are well aware of these costs – they feel them as they perform balancing acts daily trying to steer their towns and cities through necessary budget cuts and belt tightening without completely abandoning services that are increasingly in demand.  Healthcare for the uninsured is one example.  As detailed in a story in the Ventura County Star dental services for the uninsured have been cut so severely in that community that the few remaining clinics have waiting lists of several hundred (as many as 700) patients. 

People wait in the dark for hours every Tuesday and Thursday for a chance at one of the day’s eight appointments at the free dental clinic operated by the Salvation Army’s Oxnard/Port Hueneme Corps. Many of the patients are poor though a growing number are college students or middle-class wage earners who have no insurance.

Two years ago, they would have been placed on a waiting list of more than 400 names. But clinic officials said the list was so long that people moved or changed their phone numbers before their appointments arrived.

“Some of them even pulled out their teeth by themselves,” said Elva Leon, the dental assistant who helps administer the program. Now the clinic operates on a first-come, first-treated basis and Leon has grown used to people camping out all night for care.

BTW- here’s a little side note on the subject of jobs.  According to a story in CNN Money even if more jobs are created the millions of unemployed may not have much luck finding one.  That’s because companies aren’t hiring people who don’t have jobs.  Yes, you heard that right – if you are unemployed you may be screened out of the process without even a review of your application, much less an interview.  Even with so many people out of work through no fault of their own the stereotype persists – if you are unemployed it must be due to performance issues.  And it’s an easy way for employers to cut down the enormous pile of applications that arrive with every job opening.

So far the magic bullet for the economy has been federal stimulus dollars – and temporary jobs created by federal programs (e.g., Census 2010).  And that’s worked to a point but at the cost of increasing the deficit and causing sufficient concern about it that people are now against continuing the program.  To me, and numerous others (including economists and politicians), pulling stimulus money now is stopping with the job half-done.  Re-creating millions of jobs isn’t something that can be done over night.  Done right, it’s going to be a long term investment.   And it’s going to require a sustained effort and a commitment from local government and companies throughout the country.

Corporations need to look to the long term as well; beyond their pockets and those of their shareholders.  Because if they are to succeed in business they also need a strong economy, they need us to be employed with insurance and money in our pockets.  And they can’t selfishly guard their profits while insisting that someone else (the government) fix the economy. 

I’d like to ask all employed people what they are doing to help unemployed friends (or strangers) find jobs?  If you own a company can you hire one more person – even just part time?  Can you recommend an out of work friend to your employer – maybe that personal note will get their application through the screening process. 

If we don’t work together to get people back to work I don’t see how – short of the arrival of a fairy god-mother – we will get out of this.

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