Monday, June 22, 2009

Perspectives On Economic Opportunities, Skills, and Jobs

I had a discussion with a business colleague recently on the topic of how "jobs" are perceived by many non-business people, most often state and federal governmental officials.

For example, we often hear of governors or presidents taking credit for "creating jobs." Or state officials will talk about how many "jobs" are in their state, or leaving their state.

If you think about the references to "jobs" abstractly, these politicians talk as if the term refers to a stock of tangible items to be apportioned out to people.

But that's not what a "job" is at all. I contend these linguistic uses belie a totally incorrect viewpoint and understanding of what a "job" really is.

Here's how I view the context and meaning of a "job."

In a society, people have various skills. Some people also have ideas for developing products and services to sell to other people.

While we all want to have an economy that creates sufficient jobs for the people in our society, jobs are a function of business and economic activity, not the other way around.

For example, long ago, farming and various industrial activities required some number of workers. As time went by and technological advances occurred, the number of "jobs" required to produce a ton of steel, or an acre of wheat, fell. But new "jobs" arose to build the machine tools and farming equipment that saved labor in the older, once labor-intensive sectors.

Economic growth via new businesses and expansion of older ones leads to a need for more workers, thus creating "jobs."

Anything a government does to either stifle business growth, or move it elsewhere, causes "jobs" to move and, thus, be lost to the geography over which that government presides as society's political entity.

If the people in an area don't have the skills to do the work required by a new or expanded existing business, there won't be any new "jobs" there. There might be a need for more workers, but without qualified people, the jobs will appear elsewhere.

Thus the growth of technology firms around Boston in the 1980s, and in Silicon Valley for several decades. Until taxes and other expenses drove firms to add new "jobs" in Oregon, Washington, New Mexico, and even overseas.

Jobs are not a fixed or necessarily growing economic good, able to be traded, 'created' or 'saved' by government.

And economic development and business advancement can cause some 'jobs,' or, really skills, to be no longer necessary. Jobs aren't a static concept or body of things to be simply taxed and relied upon by governments.

They are the by-products of business processes and expansion. Treat business badly, cause it to contract or die, and you remove the production needs which lead to "jobs."

Perhaps my colleague best illustrated the point when he engaged in light discussion with a doctor recently.

His doctor asked what my colleague did for a living and, on hearing he is self-employed with several ventures, observed that "at least you can't be laid off."

"No," my colleague replied, "but I can go bankrupt and lose my businesses."

Jobs aren't just things which you "get" and "keep." They stem from a business' need for work to be done and skills involved in doing that work. If there's a fit with local people, at a price both can afford, then a "job" may be created for that work at that time at that price.

But speaking of jobs in some totally abstract manner, as if they are a constant stock of income-yielding positions to which all Americans, in the aggregate, are entitled, is simply a gross misunderstanding of how business works.

1 comment:

Anonymous said...

Congress and Obama don't udnerstand this. For example, their health care excise tax doesn't apply if workers decide to work outside the US. And likewise, the VAT tax they are thinking about also doesn't apply if workers move offshore. Similarly, their plans to increase corporate taxes will make US parented multinations less competitive than foreign competitors, and leave them targets for acquisitions, resulting in operations and profits moving offshore.

No concept that talented workers and profitable companies have choices and will leave if another county treats them better.