Tuesday, December 6, 2011

On The Existence of Job Creators

Job creators do not exist.  Jobs result from a functioning employment market. Full employment simply means that the market is clearing.  If your business goes out of business, another will form in its place and employ your displaced workers.  When the market clears, there are no special people who can create more jobs and clearing is a function of the condition of the market.

There are systemic factors that may prevent the market from clearing.  Conservatives would point to the minimum wage and business regulation.  Liberals would look at aggregate demand.  And both would consider the money supply.  But markets never fail because there aren't enough people willing to try to make money by hiring others

At best, the people who claim to be job creators could be productivity enhancers.  Companies succeed, at least in part, by improving the productivity of their employees.  And, improving the productivity of employees makes their labor worth more which eventually results in rising wages.  Judging by the trajectory of the wages of American workers over the past 20 years, it would appear unlikely that we are fostering many productivity enhancers these days either. 

1 comment:

  1. Nick Hanaur, founder of a Venture Capital firm gets it: "Rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.." http://www.bloomberg.com/news/2011-12-01/raise-taxes-on-the-rich-to-reward-job-creators-commentary-by-nick-hanauer.html?wpisrc=nl_wonk

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