Thursday, September 27, 2012

Job Creation and a Labor Shortage

Last week, I met a person who's company has been hiring. She had started a subsidiary and added 20+ new jobs there too. I said, "Ahh, you did this before you got your tax cut." Well, her story got me thinking...(but I haven't finished all of my research yet...)

For the past four years, everyone's been talking about job creation. In this last year, everyone talked but few did anything substantial to actually create jobs. The Republicans wanted to cut taxes. Like, if I had an extra $1,000 in my pocket, I'd hire a housekeeper...for two weeks. I think for that price I'd still have a dirty house for 50 weeks of the year. If I had a company, I'd be able to hire a few people but then have to lay them off a few weeks later. 

The Democrats want to spend money we don't have. Between the federal and state budget deficits, and consumer credit card debt, we should never have seen any recessions, depressions or dips in the economy for the past 30 years. Unfortunately, very few people are listening to the business people actually creating jobs.

Even with all the gloomy news out there, there is a category of businesses that have been creating jobs for the past four years. Let me share a bit about Springfield Remanufacturing Company, as the archetype of this category. SRC is employee-owned through an ESOP (Employee Stock Ownership Plan) and has been the herald and forerunner for the Open Book Management methodology in the Great Game of Business. Employee-owned companies and especially those that are using Open Book Management have added or retained (through fewer/smaller lay-offs) 1,200,000 of jobs (my SWAG from some data reported by National Center for Employee Ownership); that's nearly 120 jobs per company, 12% retention or growth for an employee-owned company, or 120% employment growth for an average company in the US. SRC has added 500 jobs in the last two years for 50% employment growth. 

There are about 5 million companies in the US. Approximately 3 million are the self-employed kind of companies: 1 person working out of their house  and that kind of thing. Of the remaining 2 million companies in the US employing 140 million people, there are only 10,000 that are employee-owned (NCEO source), and only 4,000 practicing hard-core Open Book Management (my SWAG). Just imagine though if we had 10% of all companies in some form of employee-ownership and using OBM: not every company, just 1 out of every 10. Instead of 140 million people employed, we'd have  154 million people employed--and we wouldn't have any unemployment. Actually we'd be in a labor shortage, because economists tell us we will always have some unemployed. So if we could get just 1 out of every 10 companies in America to do what SRC has done, all the politicians could stop talking and leave us alone.

What is employee-ownership?....What is Open Book Management?...Those are much longer posts. I've mentioned Open Book Management in some previous posts.

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