Leaders worldwide somehow recognized the presence of an economic crisis in September 2008. The crisis was at least in part precipitated by poor leadership. Disagreement seems pervasive about the source and the specific indications of poor leadership. Some blame greed while others suggest the housing bubble and mortgage credit woes have their root in the easing of credit in the late 1990s to enable home purchasing by people previously not qualified as homebuyers. Some in the U.S. propose expanding government spending while others express concern about growing federal budget deficits.
Agreement seems rather widespread that job creation is crucial to recovery from a global economic downturn. The focus of the U.S. media is, perhaps understandably, economic recovery and job creation in the U.S. From the perspective as a business consultant for 25 years, mentoring startups and improving productivity in established companies, very few elected representatives in Washington, DC and in state capitals, or in the media for that matter, seem to have much of an understanding of job creation. The White House’s official tally of “jobs created or saved” treats monthly payroll numbers as if one person working for one month is the equivalent of a job created. Whether this is just an example of clerical errors in tabulation or indicative and symptomatic of widespread miscalculation, the integrity and credibility of reports of jobs created or saved is no better than doubtful.
Economic recovery cannot happen with artificial job creation. Job creation is not easy but is no mystery. Enterprises, public or private, must find new activities for new employees or the work associated with existing activities must rise to the point of stimulating the hiring of additional staff. Net job creation means hiring people previously unemployed but it also means adding paid hours to the work weeks of people previously under-employed. In our collective effort to stimulate the economy and promote recovery for individuals, communities, and nations, leaders need to help individuals, communities, and nations discover new and sustainable ways for real net job creation. Community leaders need to meet together to discover the existing needs within the community and uncover the funding to start addressing those needs. Some enterprises will expand their payrolls. Some new enterprises will need to emerge. Some people will need to learn how to perform new tasks. Some people may need to relocate.
In tonight’s State of the Union address, President Obama talked about improving efficiency, creating jobs, and reducing the deficit. Those are not inherently mutually exclusive topics but simultaneously achieving all three will require leadership and creativity. Improving efficiency and productivity generally implies using fewer resources to accomplish the same work or using the same resources to accomplish more work; on a relative basis, improved efficiency and productivity implies job loss. If we, as an economy, want to improve efficiency and productivity, to accomplish our goal of maintaining or improving our competitive position, and we want to have net job creation, the number of net jobs created will inherently be comparatively larger. Increasing the employment base of the country may increase the country’s tax base and contribute to deficit reduction. Reducing spending is another path to deficit reduction. Stimulating the creation of new jobs seems to eliminate reduced spending as an option. If that is the case, the path to deficit reduction is a program strategically to employ the unemployed and to employ the underemployed better. Then, the ultimate scorecard may need to reflect the expansion of the payroll tax base rather than such difficult-to-measure metrics as “jobs created or saved.”