C: Hey, Dio.
D: Hey, Carlo. What’s happening?
C: I got some good news today.
D: What’s that?
C: I got laid off.
D: How’s that good news?
C: I didn’t like my job, but it was too good to leave. If I hadn’t gotten the boot, I would’ve just stayed there.
D: I know how that goes. So you’re happy to be out of there?
C: Well I don’t like job hunting much. Firms are so conservative, you know.
D: And how. Why do you suppose?
C: Hiring the wrong person is a big risk for them.
D: Yeah, we’ve talked about that before. What sort of a job are you looking for?
C: I want to do something different, but you know how it is. People only want to hire you to do things you’ve done before. That’s the big risk for them. If they hire you to do something you haven’t done before, and you don’t work out, they’re screwed.
D: How so?
C: Well start with unemployment. If they hire you and they have to let you go for any reason, their payments for unemployment insurance go up. If they don’t watch out, pretty soon all their profits go toward paying workers who didn’t work out.
D: There you go with that word again: profits.
C: What do you mean?
D: You seem to think that the purpose of a business is to make a profit.
C: Why else would a company be in business?
D: A company’s in business to pay people. Create jobs. Give them benefits. Especially health benefits.
C: How can they do that if they don’t make money?
D: They always make money.
C: Look at all the businesses that lose money! What are you talking about?
D: I was just making fun of people who think business firms exist to create jobs. Business firms have to make money before they can do anything else.
C: That should be obvious.
D: It’s not so obvious to some people. For some people, corporation is a dirty word.
C: How come?
D: I’m not sure. Why do you think critics from the left use that word negatively?
C: Habit? Maybe it’s shorthand for those dirty capitalists.
D: You know how it is: the Democrats don’t like the capitalists, and the capitalists don’t like the Democrats.
C: Does anyone like the Republicans?
D: I know a pretty woman from Alaska that people like.
C: Lay off it.
D: Okay, let’s go back to jobs.
C: The dictionary’s definition for create uses the sample phrase, create 170 jobs. What exactly is a job anyway? Isn’t it just a labor contract? Why would businesses want to create labor contracts?
D: I’m not sure what you’re driving at. Can you give me an example?
C: Suppose a new plant opens up in town, and the plant needs 170 workers to produce can-openers.
D: People don’t use can-openers anymore. Cans all have those pop-tops now.
C: I know. We’ll get to that.
D:I’m still not sure why you’re questioning the definition of a job. Could you go through the concept of a job from the business firm’s perspective?
C: Sure. The can-opener company has to build a plant, hire workers, produce the goods, distribute and market the merchandise, and close the sale. People are one component of production in a long process.
D: It’s no wonder businesses want to automate their production lines, or have their products assembled in China! It’s way cheaper!
C: Yet we vilify businesses for sending jobs overseas. What do we want them to do: pay the high cost of manufacturing over here, and go out of business?
D: Then you’d lose all the other jobs: management and administration, distribution, marketing and sales.
C: You got it.
D: When you get to the end of the whole process, people don’t even want what you’re selling. They’re not willing to pay what it costs to make it, anyway.
C: That’s right, businesses want to make a profit with as little risk as possible. That means saleable products produced at low cost.
D: So businesses aren’t in business to create jobs. They’re in business to make a profit. If we make it easier for businesses to do that, compensated work that requires people will follow.
C: You mean jobs?
D:Businesses know when they have a good opportunity to make more money by hiring more people. That’s why we talk about business confidence. Government just needs to create an environment where people can work to earn a livelihood. That’s all that counts.
C: But the government doesn’t want people working off the books! Then it can’t collect its share!
D: That’s the problem, isn’t it?
C: Look, you not like the phrase create jobs. But businesses boast all the time about how many jobs they created.
D: They just do that to get tax breaks. And to build good community relations. And to attract qualified workers. In the end, though, they want to keep their labor costs as low as possible. Federal, state, and local governments try to jack up the cost of labor at every turn.
C: So what do you do about that?
D: Press down the cost of labor! Keep pressing, pressing, pressing until businesses find it profitable to hire workers again. Keep pressing until businesses find it profitable to pay regular workers, contractors, consultants, service providers, business partners and anyone else who can help them out. So many people just have their time and their skills to offer. Businesses want to hire them as long as it’s affordable.
C: You make it sound so easy.
D: Remember what people say these days. It may be simple, but it’s not easy. It’s not easy to reverse course and create a whole new labor environment. We want to create profitable working relationships between business firms and workers who can help the firms prosper. That’s not so easy to do, given where we are now.
C: Over time, governments made it expensive and difficult to hire workers. You’re saying that governments can reverse the process to make it inexpensive and easy to hire workers?
D: Sure I’m saying that. That’s common sense. Governments won’t do it, though, because they want to squeeze as much revenue out of employment contracts as they can. Plus they think workers will be vulnerable if they don’t keep the social safety net in good repair. Never mind that the social safety net gets overloaded with unemployed people because maintaining the social safety net makes business firms reluctant to hire new people. Remember that to make a profit, businesses need as much flexibility with their labor force as they can get.
C: I guess you wouldn’t call the current system of hiring and paying people flexible.
D: Flexible! Good God! I’m surprised businesses ever hire anyone. Look what businesses have to pay on top of the base salary just to bring someone on board. Taxes and imposts on employment contracts are so great that businesses regard the addition of someone to the payroll as a highly risky move. It does not clearly increase profits.
C: You sound kind of fed up.
D: I’m amazed businesses can make any money at all. The firms that do make money have been around for a relatively long time. They’ve adapted. If you can’t figure out how to work within the established system, you die. If you want to start something from scratch and grow it to something meaningful in your lifetime, forget it. Only a tiny fraction of people have the vision and internal wherewithal to do that.
C: Barriers to entry are high all around.
D: That’s right. Two things people need to get started are time and money, but they can’t even get a business loan. Oh, and they need freedom. Freedom from so many regulations.
C: And we still fret that businesses don’t want to hire people.
D: Let’s stop fretting and cut away the underbrush for businesses – no more payments for unemployment insurance, workmen’s compensation, social security, Medicare, health care, dental care. No more requirements for any of that. No more unemployment penalty for workers you hire who wind up leaving six months down the line. No more restrictions on how long you can hire contractors or independent consultants. Ask businesses what government imposed costs and requirements they find most burdensome, the greatest obstacles to hiring people.
C: I bet the answers are likely to vary by business sector.
D: That’s right. You have to respond to what business people say, sector by sector. Give businesses the freedom they need to make a profit. If you do that, they’ll hire people, because in the end a company needs to hire people to make money.
D: You’re right that we don’t need to be experts to understand something is wrong. We know what we have to do differently.
C: We know what not to do. We bail out the Wall Street banks while people everywhere lose their jobs. Then the Wall Street banks pass out big bonuses to their employees. That’s something people understand!
D: Go with common sense. Businesses don’t hire people because they want to create jobs. They hire people to increase their profit. If hiring people doesn’t increase their profit, they won’t do it.
C: I wish we could just scrap everything and start anew.
D: You’ve got about fifteen million unemployed workers who wish the same thing!