The REAL job creators - Who are they?
It quickly became one of the most popular buzz words coined during the 2012 Presidential campaign and played perfectly into the Republican narrative that Barack Obama was weak on economic policy.
To make this point in a simple fashion, the GOP boiled it down to a single, oft repeated talking point:
Obama hurts job creators.
Like a spreading flame, the term quickly spread across the media and pretty could soon could be found just about everywhere.
The concept came from basic deductive reasoning: Companies create jobs at the direction of the people who run them, therefore the people who run companies are responsible for creating jobs. If we make life easier for them, they will in turn hire more workers and the economy as a whole will benefit
It made perfect sense…except it was wrong.
Firstly, it seemed to rely heavily on the principle that a central priority for companies was to create jobs.
Let’s clear this up right now: Businesses do not exist to create jobs, they exist to MAKE MONEY.
If you run a small company and you can make $500 000 profit with only two employees but only $300 000 profit with three, are you really going to hire someone new? Absolutely not.
And if government lowers taxes, thereby putting more money in your pocket, are you going to hire someone? No. You’re going to take your $500 000 profit plus whatever extra you get from the tax break and continue chugging along with two employees. Why? Because that approach is making you most the money.
The second flaw in the “job creators” concept is that it seems often rooted in the notion that every wealthy person is by default, a job creator.
Let’s say my name is Wilford T. Broomington IV, I am a wealthy individual and hold sizable investments in a number of companies. Am I a job creator? No.
I am not invested in the companies to make jobs, I am invested in them to make money. Since I sit on the board of directors at some of these companies, I do have a say in operational matters, but I am not the primary decision maker when it comes to hiring employees at those companies.
A company is going to do whatever is necessary to maximize profits. This almost never means hiring workers. It means cutting benefits, cutting wages, reducing spending on supplies, maximizing productivity and output from existing employees.
It can also mean laying off employees, the exact opposite of what supposed “job creators” should be doing.
But the question still remains: Who are the real job creators?
The answer is simple: We are.
You and me and everyone like us.
Know why? Because we control demand for products and services and where higher demand exists, more jobs will be created to handle that demand.
Think about it, a small business that can handle 50 orders a week with 3 employees would, more than likely, not be able to handle 500 in a week without additional help. Hence, jobs would be created.
The easier it is for the average joe to buy things, the more disposable income he has, the easier it is to boost demand and create strong conditions for job creation.
There’s really no other way to do it. Companies hire primarily because they simply can’t meet current needs with their existing workforce. It’s economics 101.
If we really want to create jobs in this country, we have to look not at giving the wealthy even more, but helping the middle class to grow stronger and helping the lower class build wealth.
If we can do that everybody wins from the lowest parts of the ladder to the highest. Increased demand means more jobs but it also means more sales dollars which in turn means more profits and thus more money in the pockets of the wealthy.
The problem is the “job creators” narrative is not meant as a fiscal policy catchphrase but moreso as a way to generate public sympathy for the wealthy by convincing people that things would be better for them if we just made it easier for already rich people to make more money.
If that doesn’t make sense to you, you’re not alone.
A quick examination of the issues at hand make it obvious the notion is flawed, but most people won’t dig a bit below the surface, they’ll simply buy the talking point that the wealthy need to have more freedom and money because the wealthy own the companies and therefore the wealthy make jobs.
After all, it makes perfect sense.
Except it doesn’t.