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The Real Job Creators

Updated on October 7, 2012

Amid the cacophonous noise of the presidential campaign and the incessant backbiting over taxes-- evidenced in the first debate--Republicans sound like a trite old vinyl record whose needle is stuck in the same position, endlessly repeating the tedious mantra of protecting job creators any time there’s a mention of hiking levies on more affluent.

Of course, this is typical Republican propaganda, aimed at keeping taxes low for those making over $250,000, a traditional segment of GOP voters. Granted, in that income category are business owners, but most work for someone else.

The truth is that the actual job creators make much less. In fact, regardless of income, you and I and everyone else are job creators. Every consumer is responsible for creating jobs.

But that simple fact of economics is lost in the rhetoric.

Economic stability and success simply stems from people purchasing products. When the economy tanks, it is because people don’t buy: they lack the resources due to high inflation, high interest rates, or unemployment. These ailments effect severe cracks in consumer confidence; thus, when people lack capital to pay for necessities, they aren’t likely to have any disposal income. And when that happens, everyone cuts back, from the living room to the board room. No one on the economic ladder is immune.

Part of the reason for the continued lagging unemployment numbers is that many employers, forced to cut jobs due to reduced demand, discovered that once the economy began to pick up, their businesses were able to operate just as efficiently without added employees. In short, those working had taken on more responsibilities—with or without additional compensation—so there was no urgency to add more workers.

That likely accounts for about least 1-2% of the unemployment rate. Another 1-2 % can be attributed to public sector employees, such as teachers, police and fireman furloughed due to state budget tightening. It hasn't helped that many politicians (who, by the way, are also government employees) brand those making a living on the taxpayer's dime as ineffectual slugs not worthy of employment and certainly not what they receive in pay and benefits. That recent popular myth has further enraged private sector workers, envious of publicly funded benefit plans. But these critics forget that public employees generally earn less than most in the private sector with similar education and training.

Also missing from that argument is the simple notion that public employees are workers and wage earners. Though branded as slothful and superfluous, they too are consumers, and when they lose their jobs, they naturally spend less, resulting in further negative impact.

Economic empowerment extends to those not working as well. When some in power argue against extending unemployment compensation, they neglect the simple truth that this income allows those without work to continue contributing economically. This is one of the safety nets vital to averting even more dire circumstances.

In short, when people have more money in their pockets (this is why tax cuts are such a popular economic stimulus), they spend more, creating the need for more products and jobs.

Public assistance, as much as many abhor it (largely because it is fraught with fraud and misuse by those who are capable of working), is another safeguard to stave off further calamity. It has a twofold effect. First, it gives recipients spending power. They spend the government dollars, a portion of which returns through tax revenue, and they strengthen the businesses they frequent. Moreover, if these people were left hung out to dry, with no safety net, they would be even more burdensome on society, many through the criminal justice system. Public assistance is one of the necessary evils that we wish we could terminate, but the fallout would prove more vexing than the existing system. As counterintuitive as it may seem, allowing those on assistance the ability to be consumers does aid the economy as a whole.

Every job in America is important, and ideally, we wish everyone was gainfully employed. But that’s not reality. It never has been and it never will be. Still, the fundamental key to achieving economic success is giving consumers, through tax cuts or tax reform, more money to create the jobs we need. It's not just the rich who create jobs; it's all of us.

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      Howard Schneider 

      6 years ago from Parsippany, New Jersey

      Very well said, Gary. Take away money and security from the 99% and the economy will tank. Their demand creates jobs. The top class is now hoarding their cash.

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