Will The Real “Job Creators” Please Stand UP!

Republicans have created the myth the rich are the “Job Creators”. I’ll grant you they are but one ingredient to the recipe, for they offer the supply of jobs. But this does not mean that they, in and of themselves, solely create jobs. No matter how cheap a product may be produced or how cheap a service may be rendered, without demand for those products and services no additional jobs will ever be created.

The Wall Street Journal reports on “What’s Wrong With America’s Job Engine” and touches upon who the real job creators are.

-Then there’s the confidence factor. If employers were sure they could sell more, they would hire more. If they were less uncertain about everything from durability of the recovery to the details of regulation, they would be more inclined to step up their hiring.

How does lowering corporate taxes aid in generating higher job growth? Lower taxes does not address the business’ concerns over lack of sales. That would take a Demand-Side economic policy instead of the established Supply-Side policies.

-Consider these clues:

-In the past, when business slumped, employers cut work forces and accepted less work per employee. During the deep recession of the early 1970s, the output of goods and services in the U.S. fell by 5% and employment by 2.5%. Economists puzzled over “labor hoarding”, or the tendency of companies to hold un to unneeded workers.

-No one talks about that any longer. Between the end of 2007 (when American employment peaked) and the end of 2009 (when it touched bottom), the U.S. economy’s output of goods and services fell by 4.5%, but the number of workers fell by a much sharper 8.3%. Today’s puzzle: How and why employers managed to boost productivity, or output per hour of work, like never before during the worst recession in decades?

Most likely, we all are in agreement that it is ridiculous to ask employers to hire unneeded employees. Lowering corporate taxes will not address this issue. But by addressing a Demand-Side economic theory, which puts more purchasing power in the hands of consumers, would spark higher demand, and thus increase demand for jobs. This is not an anti-Capitalistic approach; the Free Market can operate as business as usual. Allow the increase of demand to determine which businesses are viable and which are not.

If we are to take to the argument providing consumers more ability in purchasing power will only help McDonald’s or Walmarts, then we must investigate our business laws and how they effect our economy.

If we are to take to the argument higher labor costs lead to higher prices, this is not entirely a bad thing. Nor has this been an issue before. When the Japanese products hit the U.S. markets, consumers found these products to be cheaper than their American counterpart. We called for patriotism, and shouted “Buy American!” We were willing to accept paying a higher price for a good or service under the belief that we were supporting American businesses, to which all Americans benefited from. Why is this such a taboo subject today?

The Wall Street Journal went on to report:

-In a survey of 2.000 companies earlier this year, McKinsey Global Institute, the think tank arm of the big consulting firm, found 58% of employers expect to have more part-time, temporary, or contract workers over the next five years and 21.5% more “outsourced or offshored” workers.

-When they do hire, big U.S.-based multinational companies are more able and more willing to hire overseas, both because wages are often cheaper there and because that’s where the customers are.

The U.S. can lower corporate labor costs by instituting Medicare for everyone, taking that burden off of companies. The U.S. can also affect American consumer demand by implementing Demand-Side economic theory. And yet, both proposals have been deemed as “socialistic” or “anti-capitalistic”.

Where businesses are the ones who can open the job market, it is the consumer who control the job growth. Most people fail to realize there is a symbiotic relationship between businesses and consumers, just as there is a symbiotic relationship between employers and employees. The businesses and employers have benefited from Supply-Side policies for over thirty years now. The ability to further effect results have been capped. Businesses will prosper more through higher demand than through lower tax rates.

Perhaps we can now turn our attention to the other side of this equation, the consumer/employee.