The Coming Jobs War by Jim Clifton

Jobs War

RATING: 6/10…READ: November 24, 2011

The World Gallup Poll found what the whole world wants is a good job. This book is a frightening look at where the United States stands economically and the daunting measures it will need to take to continue it’s leadership position for another 30 years. With a huge focus on the call for more entrepreneurs, some of the prescriptions seem a bit simplistic and overlook the question of should GDP be growing indefinitely or is being the GDP leader the primary goal of a country.

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Notes:

Of the 7 billion people on Earth, there are 5 billion adults aged 15 and older. Of these 5 billion, 3 billion tell Gallup they work or want to work. Most of these people need a full-time formal job. The problem is that there are currently only 1.2 billion full-time, formal jobs in the world. This is a potentially devastating global shortfall of about 1.8 billion good jobs. It means that global unemployment for those seeking a formal good job with a paycheck and 30+ hours of steady work approaches a staggering 50%, with another 10% wanting part-time work.

Human rights, stem cell research, gay rights, women in the global workplace — what will matter about these issues will be how they affect job growth more than how they affect family, political, and religious values.

What the whole world wants is a good job.

Humans  used to desire love, money, food, shelter, safety, peace, and freedom more than anything else. The last 30 years have changed us. Now people want to have a good job, and they want their children to have a good job.

Leaders of countries and cities must make creating good jobs their No. 1 mission and primary purpose because good jobs are becoming the new currency for all world leaders.

Today’s explorers migrate to the cities that are most likely to maximize innovation and entrepreneurial talents and skill.

The U.S. government considers “employment” to include working for at least one hour during one week and being paid for it. So if I am an unemployed engineer and I mow your lawn, which takes me more than one hour, and you pay me $20, the government counts me as “employed” even if mowing your lawn was all I did that week.

-Furthermore, if you want work and have stopped looking because you have lost hope of finding a job, the U.S. government does not count you as unemployed.

Joblessness is the strongest core driver of national hopelessness.

When businesses and jobs fail, tax bases decrease, so the government has less tax money to support everything, and things deteriorate fast. It amazes me how few of my smart colleagues and friends don’t realize that when businesses fail, a country fails. When businesses fail, jobs fail. When jobs fail, GDP fails. When GDP fails, institutions, infrastructure, and governments fail. GDP and job growth are the chicken and the egg.

During the past two decades in the U.S., small and medium-sized enterprises have accounted for virtually all new jobs created. Jumbo-sized American businesses are very important to the economic ecosystem because they employ a lot of people, but mostly because they’re the key customers of small to medium-sized companies.

As of 2007, there were about 6 million businesses in the United States with at least one employee; businesses with 500 or fewer employees represent more than 99% of these 6 million. There are slightly more than 88,000 companies with 100 to 500 employees and about 18,000 with 500 to 10,000 workers — and only about 1,000 companies with more than 10,000 employees.

The pile of cash from taxes sent to Washington is about $2.6 trillion, and the amount Washington is spending is about $3.7 trillion.

Currently, it takes about three workers paying Federal Insurance Contributions Act (FICA) taxes to support one retiree, and the system works as long as there is a ratio of three workers to one retiree. But it crumbles as the ratio of workers to retirees becomes, say, two to one.

If World War II saved the republic and democracy, the unforeseen technology-entrepreneurial boom that lasted from 1970 to 2000 re-saved the country economically.

Classical economics is the science and institution of all transactions within a life, compounded over all lives. All that stuff makes up GDP.

Behavioral economic data mathematically track what man and woman were thinking before they did something, before they transacted something. A state of mind, a frame of mind, an attitude, or a value is always in place before there is a transaction.

The big leadership breakthrough within behavioral economics is to manage, lead, and build strategies and policies in the before, not the after.

Small and medium-sized businesses aren’t asking for loans because they are not in a state of mind to stick their necks out and grow — because they lack confidence, because they don’t have the spirit to grow.

It is the emotion of lacking confidence holding these businesses back, not a rational reason such as lacking credit. Classical economics can’t help with this problem.

Plato made a very cruel but astute observation: “One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors.”

Regardless of whether the institution is a business, a social enterprise, a charter school, or a new government program, the real power comes from the enterpriser, not the innovator, the thought leader, or the idea itself. The enterprisers are far scarcer than the rest.

Entrepreneurship alters the supply-and-demand equilibrium. That’s why it’s crucial to mentor budding entrepreneurs, not just people who want to work alone or be their own boss. True entrepreneurs build new jobs and increase overall demand and spending because they bring something new to the game. Either they take a current product or service and make it available to those who are not served or who are underserved, or they take a new idea and build enthusiasm, interest, and desire for it — a new demand.

Gallup has determined that 28% of the American workforce is “engaged,” another 53% is “not engaged,” and a staggering 19% is “actively disengaged.”

“Winning all the best customers in the world would be a “man on the moon” moment for the United States. Winning customers may not actually require manufacturing all the products for them, but it does require the best inventing, designing, engineering, strategies, financial tools, global logistics, leadership development, advice, education, and the almighty business models too. Winning customers means keeping entrepreneurship, innovation, and workplace energy way ahead of the rest of the world, as well as leading the world in infinite discoveries and applications. You get the picture. America needs to own global customer intelligence and then work its strategies back from there — owning the business models first and then aiming everything at the highest quality GDP growth to create the best jobs in the world in America.”

The big advantage China has over the United States right now is that China wins customers with low prices. This strategy really can work — not great, but OK for a while — because as long as America invents the new products and innovations, it can produce them for the first iteration and create millions of great jobs. But when China evolves to understanding customers and their needs better than U.S. companies do, the United States loses its advantage.

What customers at any level really want is somebody who deeply understands their needs and becomes a trusted partner or advisor.

HEATLHCARE:

Here’s a scary fact: Absolutely no institution or group in America has made any progress solving this. None. Zero. Everyone has tried, and everyone has failed. Congress has passed legislation on healthcare regarding how it is paid for not how to lower costs. So, regardless of what you read, see, and hear, total healthcare costs will continue to grow at staggering rates.

The recent healthcare reform bill is not a “healthcare bill.” It is an insurance bill. It is a bill concerning coverage and payment. Nothing in it regards solutions to why America faces unaffordable costs or how to prevent health problems. It is a bill that changes how the money moves around. It is a bill about who gets healthcare and who pays for it.

–The United States spent $2,500,000,000,000 on healthcare in 2009 — two and a half trillion dollars. Nearly half of this comes from Medicare and Medicaid (taxes). And the other half is private insurance and out-of-pocket spending.

–Healthcare is the biggest price tag for anything in America. War in Iraq and Afghanistan run about $200 billion per year. The healthcare bill per year is 10 times bigger than the annual war bill. Almost no one I talk to knows this. Sometimes I hear caring Americans say, “Well if we weren’t fighting these wars, we could afford healthcare for everyone.” Wrong. Eliminating what America is paying to fight wars wouldn’t be nearly enough to solve the healthcare mess.

–America averages about $8,000 per year per person for healthcare. When diagnosed with Type 2 diabetes or high blood pressure, for example, some Americans take pills and continue an unhealthy lifestyle rather than simply eating less and exercising more. Obese citizens with failing knee and hip joints will undergo replacement surgeries rather than simply lose weight, which often fixes the problem. These are simple examples of how misguided choices are killing a once great nation. Strong, productive societies in countries like England, Germany, Canada, and France pay less than half that per citizen. Their people live longer than Americans do, and they rate the quality of their healthcare as high as U.S. citizens rate their own.

–Finally, the problem is getting worse fast because healthcare costs, according to the U.S. government’s own figures, will grow at just over 6% per year for the next 10 years. So the total amount that America can’t afford now of $2.5 trillion is growing significantly faster than the economy and will hit $4.5 trillion within 10 years.

–Over the last eight years, about 6,000 American soldiers have been killed while fighting in Iraq and Afghanistan. During the same time, nearly 800,000 American patients have been killed by healthcare mistakes — and about 8,000,000 injured. War fatalities are so small compared to what is happening in hospitals and healthcare facilities.

–The CDC reports that 70% of the $2.5 trillion America spends on healthcare goes toward preventable diseases.

Unfit should mean something worse than it currently does. Unfit should mean “intervention required.” Unfit should mean less employable because unfit is a cause of lower energy. Unfit should mean unfit for leadership positions, just like smoking does.

There is no single act of leadership that has bigger money implications than simply doubling the number of fit Americans.

Angus Deaton, one of the world’s foremost economists, looked into the relationship between wellbeing and measures of health, such as life expectancy and prevalence of HIV, and concluded that the relationship between health and wellbeing is based on the expectation of health and not actual health status.

Great GNW that’s heading downward is worse for a city than poor GNW that’s getting a little better every year.

Job creation can only be accomplished in cities. There is huge variation of local GDP and job creation outcomes by city. Cities can be influenced and changed more than whole countries. The federal government cannot create sustainable jobs, just short-term ones. Jobs are as local as politics. Cities are job power plants of human energy, which creates jobs through innovation and especially through entrepreneurship.

There are three key energy sources of job creation in America: the country’s top 100 cities, its top 100 universities, and its 10,000 local tribal leaders. There are many other moving parts of job creation, but these are the most dependable and manageable. They are the best strengths to leverage. They are America’s supercollider for jobs.

So go exports, so goes the coming jobs war. The United States needs to more than triple exports in the next five years and increase them by 20 times in the next 30 years. The U.S. cannot win the coming jobs war by just selling more products to its own consumers. The country has to export. Exporting is its next man-on-the-moon moment.