You would never believe it given the drumbeat of negativity that passes as business news these days, but last month U.S. GNP regained all that was lost in the recession of 2008-2009 and now America stands once again as the largest economy in the history of the world.
Let’s first take a moment and be proud and of that.
Now of course not all is rosy. Above all else, persistently high unemployment, back up to 9.8% and 15 million jobless Americans as of Friday, continues to drag down the nation’s morale.
How important are jobs? Well, quite simply jobs are EVERYTHING.
To put it in perspective, let’s look at two places in the world that create very few jobs – sub-Saharan Africa and the Middle East.
Even a cursory look at the deep and tragic social problems of these regions results in two conclusions – 1) that the lack of jobs there wastes the gigantic human potential of literally hundreds of millions of people and 2) poor economic opportunity is THE main wellspring of extremist ideologies.
Now, of course the problems in the U.S. economy are nowhere even near the magnitude of those in these fortune-starved places.
And more to the point we don’t just want ANY jobs here in America. We want GOOD JOBS. I define a good job as follows:
- A job that allows for a reasonably “worry-free” meeting of the base, human needs – food, water, shelter, and clothing.
- A job that provides security from threats to health (yes, health insurance) and violence (making enough money to live in a safe neighborhood).
- A job that is part and parcel of one’s overall life mission, whereby the successful performance of it appeals to the best in all of us – self-respect, a sense of belonging and community, the inherent satisfaction of the work itself, and the satisfaction of contribution to a cause larger than our own needs.
So Where Do These Good Jobs Come From?
Well surprise surprise, they don’t come from the government but more surprisingly they don’t come from corporate America.
Rather, nearly all net job creation in the U.S. economy comes from firms less than 5 years old, or brand new (startups) and young (one to five year old) companies.
For perspective on this, 2007 was the last fully healthy “jobs” with 12 million new U.S. jobs created. And of these, startups and young companies created 8 million of them.
A few further points to illustrate:
- Since 1977, without startup companies, net job creation for the American economy would be negative (i.e. more jobs would have been lost than created) in all but a handful of years.
- Young firms – companies between 1 and 5 years old – over the past 30 years have accounted for the lion’s share (more than 2/3) of all net job creation.
- And my favorite, companies between one and five years old create on average 4 jobs per year each!
But it is often missed that the companies that are creating jobs are the usually ones that earn investors the highest returns.
Why? Simply, job-creating companies are almost always companies that are growing!
So let’s make it easier for our startups and young companies to create jobs.
From a regulation standpoint, let’s get the U.S. back up the board where it is lagging in the World Bank ease of doing business rankings – #17 in starting a business (behind countries including Belarus, Rwanda, and Saudi Arabia!), #62 in paying taxes, and #20 in international trade.
Culturally, let’s really put the entrepreneur where he or she belongs – on a pedestal as a modern day, real-life action hero.
And let’s invest in them.
Because while we like to see the good guys win, it is even sweeter when we win with them.
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