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OpEdNews Op Eds    H3'ed 11/1/11

Job Creation? Businesses Prefer Root Canal

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So businesses would love to create jobs, if only we'd give them tax breaks and ease up on regulations?


Businesses hate creating jobs.   What they love is cutting jobs.

Employees are an expense.   Businesses hire only when forced to, and only when they can't otherwise meet demand for their product.

And that's twice as true in a recession.

A "recession" is a society-wide disruption in economic demand.   The very definition points to the remedy: Revive demand.

"But," you say, "when jobs are created, demand naturally rises.   So businesses actually love job creation."  

Sure.   But here's the kicker: Each business loves other businesses to do the job creating.   Why?   Because its own employees are an expense, while the employees of other companies are its customers.

Until customers--employees of other companies--start buying more products from a business, the business loses money by hiring.

Every business understands that.   So each business holds back and waits for others to do the hiring.   The result: Everybody waits, nobody hires.

In short, to put hiring ahead of sales is to put the cart before the horse.

This is supported by an October 2011 report from PNC bank, about businesses in Chicago:

"With weak sales as their most important challenge today, only 17% say significant tax incentives for hiring new employees will positively impact their hiring plans compared to 18% for reduced regulations and 18% for lower overall government expenditures."

Instead of trying to lure businesses to take castor oil, let's give them honey.   Let's boost their sales.   When sales rise, hiring will take care of itself.

Priority targets for boosting include those businesses that improve infrastructure.   This gets us three times the bang for the buck: We employ a legion of businesses and workers, we revitalize shared economic resources, and we cut the future cost of maintaining those resources.

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Roy Lipscomb, Emeritus Director for Technology, Illinois Ballot Integrity Project

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