If you want to create jobs, your best bet is to hand out tax breaks or cash grants to established companies that have the name recognition and resources to woo state Commerce Department officials and state lawmakers, right?
Uh, no.
As Robert J. Samuelson reminds us in the latest Newsweek, job creation depends upon entrepreneurs:
If you?re interested in job creation?and who isn?t these days??you should talk to someone like Morris Panner. In 1999, Panner and some others started a Boston software company called OpenAir. By 2008 they sold it for $31 million. The firm had then grown to about 50 workers. It turns out that entrepreneurship (essentially, the founding of new companies) is crucial to job creation. But as Panner?s experience suggests, success is often a slog.
What?s frustrating and perplexing about the present job dearth is that the U.S. economy has long been a phenomenal employment machine. Here?s the record: 83 million jobs added from 1960 to 2007, with only six years of declines (1961, 1975, 1982, 1991, 2002, 2003). Conventional analysis blames today?s poor performance (jobs are 7.6 million below their pre-recession peak) on weak demand. Because people aren?t buying, businesses aren?t hiring. Though true, this omits the vital role of entrepreneurship.
Since entrepreneurs are so important, it makes sense to avoid government policies that place too many barriers in their way, as Joe Coletti explains:
It’s no wonder prudent business owners and entrepreneurs are thinking twice before hiring new workers, Coletti said. “We have to remember that business owners weigh the benefits and costs of hiring new workers,” he said. “That’s an impossible task when the costs are unclear. Some businesses know for certain that they need new workers. Others aren’t so sure. Rather than risk hiring someone who will be too costly to keep on board because of new government mandates, many business are making due with the staffing levels they have now.”
