Monday, October 11, 2010

How to Create a Job

It occurs to me that I have more first-hand experience creating jobs than the President.  There seems to be some confusion about where jobs come from.  I would like to explain where private-sector jobs come from.

First, where they DON'T come from:  piles of money just sitting around with nothing to do.  Unselfish rich people do not look at the poor unwashed, have mercy, and throw money at them.

Now, where they do come from:  A person has an idea for making more money, some sort of good or service they want to provide.  The sole purpose may not be to make money, but making money--really, creating WEALTH--where there was none previously is the basic building block.  Now, the person may be able to execute the idea all by himself, for example a shopkeeper who works alone in the shop all day long.  But what if the shop gets so busy that customers leave, unhappy that the shopkeeper can't wait on him?  Or what if the shop grows because it is so popular and the shopkeeper is doing a great job?  Both are good problems to have!  Eventually, the shopkeeper may realize that he needs to hire someone so that his vision of his shop can be realized.  The hiring of an assistant will help the shop to sell even more, thereby increasing revenue, or it may free the shopkeeper to have more time off or to start a new venture.

That's the important point right there--the hiring of an employee makes sense ONLY if the shopkeeper realizes a benefit.  Actually, it is the only reason to hire an employee, ever.  And if an employee ceases to return a worthwhile benefit to the company, then the job should not exist.  This isn't because employers are mean; it's because eventually an employee like this, or many, will kill the company.

Since creating a job means hiring an actual person and forming a relationship with a person, most employers take this very seriously.  They realize they are dealing with another person's livelihood, security and stability.  So unless they are very sure of future demand for their good or service, an employer won't hire someone.  Everyone else may work a little harder, even the sole shopkeeper who works longer hours.

In my case, I decided that I could not open my shop unless I had some part-time help.  So employing people was part of my model all along.  Creating a couple of jobs was required if I was going to even open the shop.  But I didn't do it out of the sheer goodness of my heart.  It was to fulfill the ultimate goal of making enough money to pay the kids' tuition.  I wanted to make a profit. I haven't hired more people, as fun as it would be, because that gets in the way of making more profit.

So the next time you hear any government official or journalist discussing the jobs that aren't being created, I hope you think about this post.  Jobs don't just appear because someone is feeling generous.  Those are the worst kind of "make-work" jobs.  REAL jobs create real wealth, both for the employee and the employer.  They are the only ones that are a true benefit to the economy, and an employer can't be bullied into creating them.  They only come from hope and determination and an atmosphere willing to recognize and reward risk.

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