It's time to examine the "job creators"
As November approaches, we'll be hearing repeatedly the case for low taxes on businesses. Since they create jobs, runs the message, we must do all that we can to assure that the job making machine chugs along with minimal interference. There are several problems with this argument.
First some background on "job creation." During the Great Depression the work of John Maynard Keynes suggested that certain acts of government could ease unemployment, causing new jobs to exist without any other jobs disappearing. There was thus a net increase in the number of jobs, and thus, in a manner of speaking, some "job creation" had occurred.
Prior to Keynes, in contrast, the usual assumption was that the economy always operated at or near full employment and that the addition of any new job would always come at the expense of some other. There was, in other words, an increase in employment in one industry requiring a decrease in employment elsewhere. To speak of "job creation" could thus be misleading since for every new job there had to be a loss of a job. The provision of new types of employment were not to be confused with a net rise in employment, but simply a shuffling of the deck as some types of employment replaced others.
But consider now a more subtle problem with the habit of referring to employers as job creators. Even in instances when a new job does not come at the expense of another, does it make sense to speak of the employer as the "creator?" After all, isn't it true that people seeking jobs are the "suppliers" while employers are the demanders? In markets for goods and services, it is the nearly always the "supplier," not the demander who "creates." General Motors "creates" autos which customers (the demanders) buy, brain surgeons "provide" or "create" surgical acts that patients (the demanders) receive. And so on. A rare exception to this occasionally appears when the construction and purchase of a pricey house is under discussion. Thus we might hear about a wealthy person "building a summer home," even though we know full well that it is the sellers who are the actual "builders," with the wealthy person being simply a buyer of that which has been built by others. It is likely the power and prestige of the wealthy buyer relative to the builders that leads us to credit him as being the "creator," a pretty powerful term, when you think about it.
For Labor markets the role of buyer and seller are reversed. Demanders who do the buying are employers and suppliers who make their services available are the individuals seeking work. This being so, wouldn't it be more accurate to see the supplier as one who "creates" a job that employers "buy"? Aren't barbers (the suppliers of haircuts) the ones who "do," and thus "create" haircuts. Aren't musicians (the suppliers of concerts) the ones who "do" and thus "create" concerts. In both cases, aren't those who do the buying passive relative to the suppliers? Generalizing, shouldn't we refer to those who "do" a job as the supplier of the job to the business who does the hiring. Since a job cannot be done unless someone is doing it, it would appear that an employee must be on board before we can speak of a job actually being created.
There is still a different way of looking at this. Rather than treating "job creation" as either something done by employers or something done by workers, we might instead speak of there being two forces which combine to create a job. Mutual causality has a rich history in economics. During the 19 th century, some saw costs as determining price while others saw the benefits derived from the product as "price determining." It took the late 19 th century economist Alfred Marshall to resolve matters by re-framing and insisting that the forces of demanding and supplying are equally important as surely as both blades of a scissors contribute to the cutting of paper.
We seem today to recognize mutual causation at the level of reproduction. Both the male and female contribute to the creation of a new child. But it was not always viewed this way. History can identify plenty of patriarchal societies that saw the child's genesis in the man. Sexual intercourse was essentially a means of simply moving the person-to-be from the male to the female, whose function was to provide the venue in which development could occur. While the notion that "men create babies" may seem laughable today, how much more laughable is it than the claim heard ever more often that businesses are job creators. Patriarchies may be in decline, but in the realm of economics, powerful patriarchal companies seem stronger than ever, claiming, as they do, to create not only the things we consume but the roles in life that provide the wherewithal to buy these things. Just think about it. By the rhetoric of our times, not only should we be grateful for the incomes we receive from employers but grateful for the jobs they create, and hand to us at no charge! Clearly, something is wrong with this picture.