Employment Misunderstandings

One of the things that bothers me in watching (only occasionally) the economic pundits on the nightly news is their total focus on large companies and their hand-wringing worries when any large company slows in growth, loses any profitability, or horrors, has a layoff.

A fundamental fact of the U.S. economy that these pundits seemed to have missed for the last 40 years is that the U.S. economy has been steadily strengthening by transitioning the work force from big companies to mid-size and small companies - with an emphasis on small ones.

If you could draw a circle around the Fortune 500 companies and call it MegaCompany, then look at it's metrics you would find that MegaCompany may have grown in (inflated) dollars, but has been steadily dropping in head-count. Relentlessly.

The fact of job losses in big companies is not news. It is an economic necessity for survival. The survivors have learned that it is most efficient to define what they do best and staff for that, then outsource the rest. When they outsource new jobs are created elsewhere. the work gets done more effectively, national productivity goes up, and everyone in the economy benefits.

Meanwhile entire new technologies get created and new job opportunities appear. And most of that happens in small and medium companies.

When a pundit states that "12,000 jobs were lost this month", without also stating how many new ones have appeared it is dishonest reporting, intended to deceive. On more than one occasion I have read reports on monthly job losses in months in which the unemployment rate declined. But the unemployment rate was not reported.

I spent a long tenure in one of those "large" companies. It is still doing very well, but is only about 60% of the head-count compared to the year I left. And although I really value my time there, and my learning, if starting over today I would look in the direction of smaller companies. That is where the action is in job creation.

I can already hear your objection. "But you are missing the human element - what about those workers in the large companies who just lost their job - it's not fair?"

We can talk about what you mean by fair later, but if you want to participate in the greatest economy in the world you have to be prepared to change not only jobs but careers multiple times. It is the nature of the beast.

Statists and technocrats want a planned economy in which everyone stays in the same safe jobs. Several hundred years of real experience shows that those types of economies maximize human misery.