Armageddon vs. Business-as-Usual
Published by Bob Foster
With all the whining, hand-wringing, and economic trash talking by pundits everywhere, I thought it might be interesting to look at something a little more substantial—like some historical facts maybe? I’ll bet most people don’t even know the last time our country lost almost 3 million jobs. How quickly we forget.
About all we see and hear in the media is the tragedy of Wall Street and the exorbitant paydays for the CEOs, plus the excesses of the oil industry—and rightly so, because these people certainly did not EARN their big paychecks.
On the other hand, many of these same pundits are saying our country must protect these large corporations, because they are the people who pass down the corporate wealth so workers can have jobs.
So, considering that, in general, American large corporations have traded off our country’s manufacturing base to foreign manufacturers, for fat paychecks, let us see how well the big corporations do at providing jobs during and immediately after a recession.
(The following data are from the U.S. Census Bureau.)
Our last economic downturn was 2001 to 2002 when we lost about 2.7 million jobs in the U.S., and all of these people were put back to work by 2004. Total employment in 2004 was almost identical to total employment in 2001, so I picked these two data years to see who put these 2.7 million people back to work.
Here is what I found:
- From 2001 to 2002, large corporations (over 500 employees) lost 1,643,373 jobs, and small businesses (less than 500 employees) lost 1,017,157 jobs for 2,660,530 total jobs lost.
- In 2003, large corporations lost an additional 83,889 jobs, while small businesses created 1,081,278 new jobs.
- In 2004, all the jobs lost in 2002 were replaced, with large corporations adding back 443,110 net new jobs, and small businesses added 2,232,160 new jobs.
- It would be 2006 before large corporations replaced all the jobs they lost in 2002.
- Do not assume that the small business jobs were just service or fast food jobs, because small businesses hire 40 percent of all high tech workers (scientists, engineers, and computer workers), and produce 13 times as many patents per employee than large patenting corporations. (Office of Advocacy, Small Business Administration.)
Therefore, during the last major economic turndown, it was the small businesses of America that turned it around and put people back to work. My conclusion is that, it will be the small businesses of America—the real entrepreneurs—who will turn us around again…and create the jobs to put people back to work again. The big corporations just cannot do it.
Will it happen quickly? Of course not—emotions control our economy, and it takes time for emotions to stabilize. But, it will happen, and it will happen regardless of what Washington does…it may even happen faster if the government minimizes their involvement.
I only wish our politicians would realize this.
Comments
3 Responses to “Armageddon vs. Business-as-Usual”
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What I’ve witnessed over the past few decades of being in this same situation, is after a large exodus from big corporations, people will generally either try to hurry up and get into another similar job if they can and their market will accommodate them, or they’ll try to go it on their own and start a new business or join forces with others in the same situation in a small business venture.
What remains to be seen THIS time though, is how well are these folks sitting to be able to either borrow the funds or mortgage their house for the start-up capital for these ventures? So many people have lost a great deal of value in their 401Ks, stock portfolios AND their property all at the same time.
I too, am one of those unfortunate ones who has recently been laid off in the past couple months and am trying to go it on my own once again. I have my industry knowledge and an unfailing work ethic to try to pull me through once again… but I won’t be relying on capital investments or loans to make it happen this time. We’ll see how things turn out – it will make for a good story if nothing else.
Although I feel bad for the unfortunate corporate workers who have been laid off, I firmly believe in the free enterprise system and think the “bail out” is a travesty. Bad management at any level should not be rewarded or underwritten. Those companies SHOULD die. Stronger, well managed companies and/or enterprising young entrepreneurs will ravage the spoils and new innovations will emerge. Your comments about the small businesses employing more people than large companies is dead on!!
The taxation increases and penalties our government wants to impose on those who prosper is the exact opposite incentive to small business to achieve what needs to happen to heal this economy. Perhaps this mentality came from the same people who’s parenting skills give candy to misbehaving children as punishment??
Good point, i guess it had to happen.