Monday, July 18, 2011

No Hiring Not about Govt

Well, it's official. Even the Wall Street Journal is arguing that the stagnant employment numbers have everything to do with a lack of consumer demand. Well, duh. Businesses hire when business expands and they need to produce more product and/or service. Period. It's, for the most part, that simple.

Yet, for the same twisted ideological reasons that influence most of their naivete about the economy, many "conservatives" argue that business are simply uncertain about government policies and taxes - so they are delaying hiring.

Yeah, right.

As if a business would turn down increased commerce and orders resulting from demand because they are worried about taxes going up. It's supply and demand, people. And demand impacts hiring. That's the way it works.


Matthew K. Tabor said...

For some businesses, yes -- and not for others.

If your store sells widgets and demand for widgets is so high that you can't keep up, then yes -- you hire even in the face of uncertain government policy. The demand drives your decision, and it's pretty close to "that simple."

But that's not every business. If you sell widget accessories, and your business depends on research and development to bring new products to the market -- and all the testing and refining and marketing that goes along with that, which comes *before* that demand windfall -- you might have to play it safe before you gamble on expanding.

It depends on your resources and your sphere, for sure, as well as your commitment to the people you potentially employ -- just one "Conservative" telling you why I'm very careful with hiring/contracting at the moment.

mmazenko said...

Matt, I never knew you to be an employer - a common criticism of me as a teacher when people claim I have no knowledge or right to speak on economic issues related to taxes and jobs.

Ultimately, businesses owe nothing to their employees, and thus companies like Cisco can fire 10,000 people this week in order to boost earnings for stockholders and protect salaries and benefits for the people at the top. Certainly that is within their rights. But it doesn't make for a stronger society and community.

With corporate profits and CEO pay at record highs, and corporate taxes at record lows, it seems a bit disingenuous to argue that companies are simply holding off on hiring and opportunities because their tax bills might go up. Some leaders, like the CEO of Honeywell, argues it's a bit of a ruse. He wouldn't turn down opportunities to hire and expand based on what might happen if the opportunity is currently open.

But that just an opinion.

Anonymous said...

What Matt is worried about, I think, is future demand. OK. I get that. But to have better demand in the future, people have to have money with which to buy goods and services, which means good jobs.

If you believe that the government shouldn't spend (not putting words in anyone's mouth here), OK, then for things to work, those that have money have to start spending by hiring and buying stuff. Where else can people get money in order to buy your products.

The way we're talking about austerity, Matt has every reason to worry and hold back. But of course, if everyone takes the same attitude, we end up with a self-fulfilling job-killing prophecy.

mmazenko said...

You're absolutely right, Abellia.

That's why my favorite CEOs are people like John Mackey and Howard Schultz who know they need to be stewards of their communities - not just their stockholder. Many German and Scandanavian CEOs feel and act the same way.

It's so shortsighted to believe that as a business leader you don't have to look out for the people who work for you so they can contribute to earn and contribute to GDP.