Whose Job Is Being Saved?

In the days since Pres. Obama gave his big speech on jobs, the news media has been inundated with commentary, editorials and letters to the editor. I am impressed with the fact that so many people are focused on this problem. Perhaps our collective intelligence will help us find solutions.

My twenty-four cents: everyone talks about jobs, but that’s like talking about how to produce more milk while ignoring the cows. In other words, we need to talk about how to help businesses grow. That’s what will result in more jobs.

The alternative is more public sector employment. Fortunately, the public understands that the expansion in public sector employment over the past 50 years has come with a heavy price. Here are two nasty little facts no one talks about: (1) When most people are hired in the public sector they stay their for their entire work life and (2) Once we create a public sector job, that position never goes away.

I’ll site an example from my own business career. When I first launched Empire Information Services, we had to convince New York State agencies that our press release delivery service could save them thousands. We discovered the best way to do that was for them to show us their press release mailing lists.

In those days state agencies issued press releases by printing hundreds of copies, printing hundreds of labels, running the envelopes through the postage machines and hand-folding the releases and stuffing them into envelopes to be mailed. When we examined their mailing lists, we discovered that about 20 to 30% of the names on the list were bad. Why? They never took a name off a list, but only added new ones.

The same is true of positions allocated to government agencies at all levels. Once new position has been created, there’s no mechanism in place to retire that position even if the tasks that person was to perform have been completed and no repetition is required.

In the private sector, it’s rare for an employer to keep a position that is no longer productive. That can result in a person being fired, but being fired for that reason should not be looked on as a tragedy. First, it means the company is healthier; second it means the person has been given an opportunity to find something more meaningful than doing whatever they were doing.

So how can we help businesses grow? My suggestions are focused on small businesses since they are the engine of job creation. Large companies are looking to reduce their workforce these days; small companies are the ones looking to grow.

What do small companies need? (1) access to capital, (2) access to markets & (3) access to a workforce that possesses the skills they need to grow.

What they do not need is to have to spend time satisfying some agency that they are not raping the environment or their employees or the customer. For example, as of late the New York State Labor Department has been harassing employers who use part-time or temporary workers. This is totally counterproductive because it tells employers they shouldn’t hire part-time or temporary workers.

Another example: because Empire Information Services was located for most of its existence in downtown Schenectady, we were eligible for certain tax benefits if we hired people who fit certain criteria. The problem? Filling out the forms, etc., cost me more than the tax benefit I gained. Government agencies should not play favorites, giving tax breaks to certain companies in return for promises to hire workers. Evidence shows time and again that this program doesn’t work and it distorts the labor market and creates an uneven playing field for employers.

The other thing employers need is confidence that the rules of the game will not change every year or two. Unfortunately recently the rules are changing all the time. Business owners are loath to invest (or hire) in a climate of uncertainty. A moratorium on rules imposed by agencies such as EPA would do more to help businesses expand than Pres. Obama’s incentive program.

By the way the President’s $450 billion American Jobs Act will likely result in at most 3.5 million new jobs. That will reduce the unemployment rate perhaps to 7 percent. Since it will probably prevent the country from sliding back into a recession, the President’s program appears mostly aimed at keeping one particular individual from becoming unemployed. That’s a pretty high price to pay to save one job.

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