BUSINESS EXCHANGE: Who Creates Jobs?
William Reed | 12/11/2013, 3 p.m.
Black Americans are often misled when politicians and pundits refer to the ability of the President of the United States (POTUS) to "create jobs" during their terms in office. But, in the reality of America’s economy, the private sector is where jobs originate. America’s private sector is run by citizens or groups, usually as a means of enterprise for profit. This differs from countries where the government exerts considerable power over the economy such as, The People's Republic of China.
Black Americans have to become more educated in private enterprise and capitalistic processes. “Job creation” is a central theme across America these days. Take Santa, for example, there are some Blacks who fervently believe that the ability to create jobs is inherent in the powers of the POTUS – think again.
The government’s limited role in creating jobs is a reality Blacks need to grasp. More of us have to accept that the government’s only role is to help create conditions for the growth of businesses, both large and small. A “job” is what we all want. Whether, it’s in the private or public sector, most of us just want to hear: “Can you start tomorrow?”
Since 2000, the labor force has steadily declined, but, Department of Labor figures show hiring is up: August through October 2013 employers added an average of 202,000 jobs. Let’s go back to basics: You get a job because someone needs some work done and is willing and able to pay you for it. Someone who is willing and able to compensate you with wages, sound working conditions, benefits, opportunities for advancement and intrinsic rewards enough to persuade you to turn down all competing offers and accept the job; and willing to put up with your human deficiencies in getting the work done. He or she does this because you present the education, skills, expertise, judgment, grooming, intelligence and social skills necessary to get the job done and most importantly, to return to the employer value that exceeds what it costs him/her to compensate you.
Black Americans are often misled by broadcast reports that promote the "producers-vs.-takers" theory that: America is divided between "producers" who work hard and pay taxes and "takers" who see themselves as victims, demand entitlements from the government, and don't care about their own lives. Many Blacks see the Republican Party as the “party of the producers,” but not in a desirable way.
Make no mistake, it’s entrepreneurs who put up the capital for the enterprise, take responsibility for loans and other financing, pay expenses and own the assets including revenue. If there’s more revenue than expenses, they enjoy profits that enable them to live well and invest in another round of entrepreneurship. If there’s less revenue, and if the losing trend isn’t reversed, the enterprise eventually fails, and the entrepreneur goes bankrupt and has to implore banks or other financiers for capital to try again, or becomes the employee of some other more successful entrepreneur.
Jobs come from successful entrepreneurs and investors willing and able to risk a buck on you in order to have the potential to eventually make two bucks for themselves and for the next round of investment, which in turn has the potential to create a new job or enable you to receive a raise. In order for that to happen, there has to be freedom of contract, respect and protection of private property rights.
“Politics” only exacerbates the process. It wasn’t the POTUS, or Congress, but small businesses that created some 65 percent of the net new jobs of recent years. Bureau of Labor Statistics data show that over the 15 years from 1993 to mid-2008, 31 percent of net job gains resulted from the opening of new establishments. The remaining 69 percent are also due to successful businesses of all sizes that expanded. Most of the workers employed by Black-owned businesses are minorities. Of the 1.9 million Black-owned businesses existing in 2007, 106,824 had paid employees.
William Reed is publisher of “Who’s Who in Black Corporate America” and available for projects via the BaileyGroup.org.