HOW DOES THE GOVERNMENT CREATE A JOB?
September 19, 2011
If I could get close to President Obama, close enough to speak to him, I’d like to ask him this question: “Mr. President, how, exactly, is a job created?” I think I know his answer but, the spin aside, I think he would say: "The government would dole out the money to create government jobs, and..." Hold it right there, Mr. President. You mean PUBLIC jobs, not PRIVATE ones -- Right?
Did Franklin Roosevelt do that? Yes, but that was in the day before political correctness, affirmative action, preferential treatment and civil rights.
Today's "public" jobs market is very much monitored and given the need for diversity, preferential treatments takes on a whole new meaning, i.e. Experience in the private sector doesn't count! I suggest that the number of public jobs created, or saved, doesn't match up to the number of private jobs lost and not to be replaced.
There is a whole other aspect to jobs creation we won't hear from Mr. Obama or anyone in his administration. After nearly three years of the President claiming that he is “creating (or ‘saving’) jobs,” even as unemployment rises and actual job creation has stalled, questions about the President’s policies have quite naturally begun to emerge.
Typically the inclination is to ask “where are the jobs you promised us Mr. President?” To this, we have heard the President offer clever responses like “shovel ready wasn’t as..uh…shovel-ready as we expected” (he made this little quip with a chuckle in his voice back in June, at a meeting of his Council on Jobs and Competitiveness in North Carolina when he was confronted with the problems of federal government regulations delaying construction projects for months, or even many years). But Americans need to take a step back, and ask a preliminary question – not a question about “where are the jobs?” but rather, “how is a job supposedly created in the first place?”
President Obama frequently juxtaposes “Wall Street,” i.e., wealthy bankers and investors, from “Main Street,” i.e. everyday working class people, and he insists that his policies are supportive of those on “Main Street.” Given his affection for all us “Main Street types,” he would do well to look to the wisdom of Main Street for an answer to the question “how is a job created?,” and for some clues as to why job growth isn’t happening.
Take for example a Main Street couple named Steve and Gwynn. The married business partners co-own own a small chain of six Mexican food restaurants, with locations in two different Western states. While consulting with them recently on some of their marketing and advertising strategies, I got an earful from them about how the federal government is impacting their business – and the impact has not been positive.
For one, Steve and Gwynn’s greatest struggle with advertising is not about getting customers in to their restaurants. While the past three years have been a struggle for them, their revenues for 2011 have thus far out-paced 2010 on a month-by-month basis, and their Limited Liability Corporation is doing well financially.
Interestingly, Steve and Gwynn’s biggest challenge is with labor. While the hourly rate at which they employ kitchen help is slightly over the government mandated minimum, they still have a difficult time finding and retaining workers for these otherwise “entry level” positions.
Why would American small business owners have difficulty finding workers in an economy that is producing painfully high unemployment? “It’s easier and more lucrative for some adults to collect unemployment benefits than it is to work,” Steve notes. In short, the unemployment benefits provided with a stroke of President Obama’s pen have, at least in Steve and Gwynn’s case severely decreased their labor pool. As for teenagers and young adults (a demographic with severely high unemployment rates) who might be candidates to work at Steve and Gwynn’s restaurants, Gwynn noted to me that “too many kids don’t want to get dirty at work, so even when we hire them they generally don’t stay very long.”
But what happens when a qualified adult applicant is willing to get trained and ready to work – surely a fulltime salaried job is “created” for them, right? “We hire as few fulltime employees as possible” Steve explains. The reason is that they can’t figure out how to fully comply with the Obamacare federal health care laws. “We paid three law firms to consult us on how to comply with that law when it first came up” Steve explains, “and all three firms gave us three different explanations. I think we’re in compliance with our folks right now, but we hire as few full-timers as possible, to reduce our risks of fines incase we’re doing it wrong.”
So Main Street small business owners Steve and Gwynn hire as few full time employees as possible. But that probably means that they are creating more part time jobs, wouldn’t you think? “We know the I.R.S. doesn’t like this” Gwynn notes, acknowledging that the Obama Administration has hired an Army of additional I.R.S. agents to make sure that, among other things, businesses aren’t failing to extend fulltime jobs to people simply as a means of avoiding the healthcare benefits required for full time workers. “We put ourselves at risk if we hire somebody full time, and we’re susceptible to different risks if we hire people part time” she says. “We’re kind of on the run from our government, but we’re doing our best to stay strong.”
President Obama could learn much from everyday small business owners about how genuine, authentic “demand,” and not legislation, is what creates a job. He could also learn why his policies are eliminating them.
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