Armageddon vs. Business-as-Usual
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.
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