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Labor & Economy

Job Creation Myth





When I was a teenager in the 1950s, gasoline was cheap but cash was hard to come by. It was common practice to carry a siphon hose in one’s car because friends would frequently run out of gas. With a hose you could get just enough gas from a friend’s car to reach a gas station without having to get a can and make two trips. The hose was also useful for getting gas from the parents’ vehicles.

A siphoning hose uses atmospheric pressure and gravity to cause fluid to flow, once started, without further efforts. When adequate pressure is reached, the flow continues unabated as long as there is a sufficient source of liquid. This makes a great analogy for our economy because the notion of using an economic stimulus works exactly like the siphon hose. Get it going with sufficient force, and it will continue on its own as long as there is a demand.

Jump-starting the economy versus austere measures is an ideological hurdle in politics. Which method works best? What has this got to do with job creation? Good questions, indicating it’s high time to take a fresh look at conventional wisdom. My generation grew up in a world where loyalty to one’s employer was expected. It was supposed to be reciprocal, but the economy was strong enough that loyalty to the employee was seldom put to the test. Most people were prone to give their employer the benefit of the doubt when it came to the question of allegiance.

So, when one’s attitude toward their employer is to be grateful for having been employed, it just seems like common sense to think of employers as job creators. Hold that thought for a moment.

In the Midwest there are companies with caravans of harvesting combines who travel northward harvesting wheat and other crops in the summer and fall. It is cheaper for many farmers to hire a company to harvest their crops instead of buying and maintaining the equipment themselves. My point is that employers are more like harvesters than job creators. The harvesters don’t work unless something needs reaping, and likewise most companies do not hire unless there is money to be made. Gratitude for having been offered a job tends to obscure this reality.

The expectation of reciprocal loyalty over the past two decades has pretty much evaporated. The reality has always been that employers don’t hire people unless there is money on the table or in the field, and it seems exceptionally naïve to have ever thought otherwise.

More often than not, political usage of the term job creator is deceptive. The implication in pro-business political ads is that if we vote for a candidate who is friendly to the job creators, then there will be more jobs. Maybe, maybe not. In a nutshell, no demand, no customers, no jobs. But it doesn’t stop here.

If the candidate is too friendly with the so-called job creators, then the jobs are not likely to pay a living wage because the employers will write all of the rules and laws.

Now there are companies that innovate and offer new products, and in the process create their own demand. In effect, they do create jobs. But for the most part, the nation’s big corporate employers are analogous to crop harvesters. When possible they ramp up to harvest and cash in. There is nothing wrong with this, but keeping this reality in political perspective is critical to the well-being of those who work for a living and vote.

Stimulating the economy is like siphoning gas: if it’s not done with enough force, it won’t flow with enough pressure to keep going. Austerity won’t get you far enough down the road to reach a gas station, and the people promising to create jobs without a flowing economy are talking through their hats. No demand, no flow, nothing to reap, no jobs.

This is not rocket science; it’s not even a mysterious process when you stop drinking the political Kool-Aid. Put the ideological rhetoric in perspective and admit that a just society is a worthy goal and that working people count as much as Wall Street executives.

Gratitude toward employers during the past half-century has been so forceful and overwhelming that the right of an entrepreneur to exploit workers with exceptionally low wages and degrading working conditions has traditionally gotten a free pass. They act as if they have a divine right to do this because, after all, they are job creators.

It’s long past time to think through the mythology and the glorious rights of employers. If a task is worth doing and a job needs to be created, then it is worth a living wage. If not, let the entrepreneurs or executives do it themselves.

Charles D. Hayes is the author of Beyond the American Dream: Lifelong Learning and the Search for Meaning in a Postmodern World. This post appears with permission via LA Progressive.

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