Friday, February 24, 2012

Why the focus on Jobs?

There is a great focus in our public discourse on jobs being representative of the health of our economy. Why?  This doesn't make that much sense since we like in a capitalism economy, not in a labor-ism economy.  Private business make up the majority of our economy and are often the main drivers of economic growth and job growth.

However, businesses aren’t in the business of creating jobs.  At best, job creation is a byproduct of a successful business. Most businesses — most successful businesses — actually destroy jobs. That doesn’t mean businesses are evil; it’s just what they do: They create wealth for their owners by maximizing profits. 
Maximizing profits often means minimizing costs, especially the labor costs that account for up to three-fourths of the overhead businesses carry each month. Destroying jobs — by introducing more productive methods, by outsourcing labor to other companies or to other countries, by cutting to the bone — is often the only way businesses survive in this competitive world.

The fact remains that businesses aren’t job creators; they are profit maximizers. The two goals are very different. For businesses, jobs effectively are a necessary evil. Jobs represent a cost, which must be minimized. Of course, the business must hire some people to produce its goods and services, but the focus is always on profit. If it’s profitable to hire more workers, then the business will hire more workers. If it’s profitable to fire workers, then most businesses will fire workers. 

Jobs are super important.  It's the way 98% of breadwinners make money to support their families.  However, it is not the job of private business to create jobs.  In business schools across this country, there are probably 0 classes strictly on "job creation".  Here lies one of the biggest potential sources of tension in our society.  Hopefully it doesn't end in violent revolution.

No comments:

Post a Comment