By: Roy Salisbury | Monday, July 31 2017
This is a very simple question with a plethora of opinions, beliefs and misconceptions. These range from the government being the champion of job creation to large corporations driving the economy both of which are wrong. Small Business is the driving force for true job creation with sustainability, however there is a need for certain elements and conditions being present. Believe it or not you need an economy that is exploding or an economy in distress as a condition, and the element is capital not just money, but smart capital.
The Government is not a proper catalyst for job creating and they have proved to be very inept. Some would even say the Government has created the unemployment situation through too much regulation and too much tinkering with the markets.
There are many smart people in Government but limited common sense, resulting in negatives such as regulations seeking to control rather than improve, which in the end limits productivity and cost jobs.
If you could combine smart money, smart regulation, and smart politicians, you would not have the problems we have today, but unfortunately, we do and we need to work with what we have, not what we wish for.
So how do we create jobs? The answer is smart money and current and future hard working business owners, and managers who understand what the market wants, needs, and provide the solution.
Currently the financial system is a daisy chain of moving capital around and rarely does it get where it is truly needed. Mostly the banks and people in the know benefit at the expense of the economy and hardworking Americans.
Mr. & Mrs. John Q public put their money into retirement funds, which then gets invested into financial markets, one would “assume” investments benefit companies which should create jobs. Assumptions can and do turn us into fools from time to time.
Government Stimulus has been averaging $85 Billion per month for some time and most of it seems to be benefiting very few, banks and mega financial institutions, and none has trickled down to the segment most in need, small business, who would create jobs if they had the financial resources.
Let’s look at some numbers! The average of the last 3 months’ jobs gains has been around 186,000. If one was to assume the current stimulus was the catalyst for these jobs the cost would be roughly $456,000 per job. I already pointed out the stimulus has not tricked down to the small business community so how were the jobs created?
Let’s assume that the that the private sector created these jobs at an average of say $130,000 salary, which is a complex calculation based on the cost to deploy assets to support a new job position. The private sector would have paid roughly $24.18 Billion.
My guess is we have not created any new jobs in a long time and much of the employment data is inaccurate and most of the employment is not new, it is just underemployment for many who have no choice but to take a lower paying job than they were educated and trained for to get back into the workforce.
What is the sense of disseminating fictitious numbers, are we comparing apples, oranges and pineapples? Simply put, if the private sector created $85 Billion in new jobs (558,000) the economy would be growing 4% to 6%, and at the end of the year 6,696,000 new jobs would be created and the treasury would have saved $1.02 Trillion that could be used to reduce debt, fund needed infrastructure, provide for the nation’s defense, and much more.
The simple fact is the Government needs to step back and take a supporting role in creating jobs and help small business with regulatory and tax schemes that they can live with. The simple fact is that a weak economy creates opportunity for strong willed entrepreneurs, and if you give them access to smart capital the economy will start down the long road to recovery.
We need builders not just managers.