Where Do Jobs Come From?
By: Doug Busselman, Executive Vice President
After reading the news article yesterday on how Senator Reid and leaders from the Nevada Legislature are working up a game plan on green energy jobs, I couldn’t help but mull over my own thoughts on the place where jobs actually come from. I guess, based on all the hype over the federal stimulus spending spree there are plenty of believers that government, through the magic of public funding, can create jobs. We know that government through laws and regulations can dictate the amount of pay those working on jobs can receive. Once this was just in the form of minimum wages, but now as our President and his co-workers in government work to nationalize private sector enterprises like car companies, banks, etc. – they are also starting to exert control on how much maximum pay can be too.
{As I learned when I attended the University of Nevada’s “Report to the Basin” meeting a week ago, my simplistic idea regarding where jobs come from might not pass muster, since I haven’t got a degree in economics or a support system of PhD reviewers to tell me through a peer review whether I got it right or not. This isn’t to say that you can’t share your comments and feedback to set me straight…}
I am of the opinion that jobs are created by enterprises who engage in providing services or products that people pay for. Those who are willing to take the risk and make the investment in putting together the necessary capital and other resources for the enterprise to operate hire others to assist them in delivering the service or products they are offering.
In the case of agriculture, wealth is created (and in many circumstances jobs too) through the use of natural resources (sunshine, soil, water, etc.) growing food and/or fiber for further processing and job creation up the production/marketing channel. Other natural resource interactive businesses (loggers and miners come to mind) also create wealth and jobs through their work in harvesting natural resources for further processing and value-added production.
Workers, who are employed to provide a service or product, are valuable contributors to a company’s ability to deliver the service or product that the company’s customers buy. Having said that, the workers’ ultimate value is realized through the company’s ability to provide the service or product at a rate where customers will purchase the product or service, yielding a return sufficient to keep the company operating and making money to pay the workers. If the business enterprise is successful in motivating customers to continue to purchase and achieve healthy enough profits, workers who make the company successful have the ability to share in the outcomes or take their talents and abilities to others who might be willing to pay even more or provide greater benefits for the worker.
Government obtains its revenue and resources from the private sector, including business enterprises like have been noted above. Government actions (like taxes or fees) may have the ability to hire workers or business enterprises to carry out work in providing a service or product, but having the financial resources to pay for that work can only come after government has acquired the resources from the private sector. Government can only pay Peter after getting the money from Paul and probably a lot of others (including in some cases Peter too).
When the burden of having to pay too much for government or the costs associated with operating the business enterprise exceeds the ability for the company to provide its products or services for what customers can or will pay – the cascade of dealing with the lack of return begins. Those workers who had jobs in providing the service or the product can’t be kept on the payroll because the resources to make the payments aren’t available.
Although I can’t exactly cite for certain the source, I believe it was Sir Winston Churchill, who observed that carrying an economy through government spending is like a person trying to lift themselves up, pulling on the handle -- while standing in a bucket.
It would seem that our expectations for government being the source of improved employment – taking the approach we’re currently seeing – might be worth re-evaluation.
After reading the news article yesterday on how Senator Reid and leaders from the Nevada Legislature are working up a game plan on green energy jobs, I couldn’t help but mull over my own thoughts on the place where jobs actually come from. I guess, based on all the hype over the federal stimulus spending spree there are plenty of believers that government, through the magic of public funding, can create jobs. We know that government through laws and regulations can dictate the amount of pay those working on jobs can receive. Once this was just in the form of minimum wages, but now as our President and his co-workers in government work to nationalize private sector enterprises like car companies, banks, etc. – they are also starting to exert control on how much maximum pay can be too.
{As I learned when I attended the University of Nevada’s “Report to the Basin” meeting a week ago, my simplistic idea regarding where jobs come from might not pass muster, since I haven’t got a degree in economics or a support system of PhD reviewers to tell me through a peer review whether I got it right or not. This isn’t to say that you can’t share your comments and feedback to set me straight…}
I am of the opinion that jobs are created by enterprises who engage in providing services or products that people pay for. Those who are willing to take the risk and make the investment in putting together the necessary capital and other resources for the enterprise to operate hire others to assist them in delivering the service or products they are offering.
In the case of agriculture, wealth is created (and in many circumstances jobs too) through the use of natural resources (sunshine, soil, water, etc.) growing food and/or fiber for further processing and job creation up the production/marketing channel. Other natural resource interactive businesses (loggers and miners come to mind) also create wealth and jobs through their work in harvesting natural resources for further processing and value-added production.
Workers, who are employed to provide a service or product, are valuable contributors to a company’s ability to deliver the service or product that the company’s customers buy. Having said that, the workers’ ultimate value is realized through the company’s ability to provide the service or product at a rate where customers will purchase the product or service, yielding a return sufficient to keep the company operating and making money to pay the workers. If the business enterprise is successful in motivating customers to continue to purchase and achieve healthy enough profits, workers who make the company successful have the ability to share in the outcomes or take their talents and abilities to others who might be willing to pay even more or provide greater benefits for the worker.
Government obtains its revenue and resources from the private sector, including business enterprises like have been noted above. Government actions (like taxes or fees) may have the ability to hire workers or business enterprises to carry out work in providing a service or product, but having the financial resources to pay for that work can only come after government has acquired the resources from the private sector. Government can only pay Peter after getting the money from Paul and probably a lot of others (including in some cases Peter too).
When the burden of having to pay too much for government or the costs associated with operating the business enterprise exceeds the ability for the company to provide its products or services for what customers can or will pay – the cascade of dealing with the lack of return begins. Those workers who had jobs in providing the service or the product can’t be kept on the payroll because the resources to make the payments aren’t available.
Although I can’t exactly cite for certain the source, I believe it was Sir Winston Churchill, who observed that carrying an economy through government spending is like a person trying to lift themselves up, pulling on the handle -- while standing in a bucket.
It would seem that our expectations for government being the source of improved employment – taking the approach we’re currently seeing – might be worth re-evaluation.
Posted by Doug Busselman at 7/1/2009 8:23 AM 
Categories: Government
Tags: Federal Stimulus Jobs Green Jobs Employment
Categories: Government
Tags: Federal Stimulus Jobs Green Jobs Employment
Doug:
I do not have a degree in economics either, but I do have a BBA along with my MS in information Systems, so those Formal Education sources lead me to agree with and support your analysis of where jobs originate from.
Closer to home; I can say that for our small family Nursery (raising cacti, agave, yucca, and desert tolerant trees) we have decided that it is no longer economically feasible to continue to hire a part time laborer as we have in the past. The demand for the product is down because the nurseries we wholesale to are buying less, and the cost of labor is up due to our State and Federal Tax and Fee structures continuing to escalate.
Yes, your analysis is 100% correct; so there must be other nefarious actions at work in the background.
Bill Parson
http://parsonforsenate2010.com/
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