Let’s Create a Million New Good Jobs

Pistis, The Trusted Name in Digital Marketing

The unemployment rate is 5.0%. This is great but the problem is that millions of people are still unemployed or underemployed.

http://data.bls.gov/timeseries/LNS12032194

The African-American unemployment rate is 9.0% and for African-Americans 16 to 19 years, the unemployment rate is 25.3%.

Yet we need more than just jobs alone. We need good jobs. According to the Social Security Administration 51.4 percent of all Americans make less than $30,000 per year which is only slightly higher than the poverty guideline for a family of four of $24,250. 1 in 5 people in New York City live below the poverty level.

According to a Good Jobs First report, “Shortchanging Small Business: How Big Businesses Dominate State Economic Development Incentives:”

Small businesses account for a large share of the United States’ GDP. A subset of firms that are young and high-growth generate a large share of new jobs. Locally owned firms have been found to generate greater local economic ripple effects than chain establishments or other non-locally owned companies…. the Small Business Administration, for example, attributes almost half of private nonfarm GDP and almost two-thirds of net new private-sector jobs to what it calls small businesses.

[Yet a]cross the 16 programs in 14 states examined, large companies are receiving 80 to 96 percent of the subsidy dollars, and somewhat smaller but still very disproportionate shares of the deals (indicating that deals granted large businesses are more lucrative). Overall, big businesses received 90 percent of the $3.2 billion awarded, and 70 percent of the deals.

For example, in New York City, 80 percent of $82,471,363 in deals went to large firms.

Greg LeRoy founded Good Jobs First in 1998

One way to address these problems is for Americans to buy more products manufactured in the United States and for New Yorkers to purchase more locally made products.

If we all buy just 5% more US made products we will create a MILLION new jobs.

America’s problem is not that it does not work like China. It is that it no longer works like America. ~ Richard McGregor

We at Pistis are addressing this by developing a search engine that will have products ads with place of manufacturing information. This is to provide the data so that we can all buy 5% more US made products and create a MILLION new jobs.

Today on Google, when someone searches for anything related to a product name, Google automatically populates most of the above-the-fold space on the Search Engine Result Page (SERP) with Product Listing Ads (PLAs). 

What big-brand Pay-Per-Click (PPC) managers are finding out is that their PLAs are doing extremely well but this is at the expense of their regular text ads such as AdWords.

Frank DuBois

Product ads such as PLAs are proving to be very effective and we propose to create a search engine that will have products ads with place of manufacturing information. This information will be like the Kogod Made In America Auto Index assembled by Frank DuBois at American University’s Kogod School of Bussiness.

KOGOD MADE IN AMERICA AUTO INDEX TABLE KEY | Profit Margin, 6%: 6 if US company; 0 if foreign | Labor, 6%: 6 if assembled in US; 0 if foreign | Research & Development, 6%: 6 if US company; 3 if foreign and assembled in US; 1 if foreign and imported | Inventory, Capital, & Other Expenses, 11%: 11 if assembled in US; 0 if assembled outside of US | Engine, 14%: 14 if US produced; 0 if not | Transmission: 7 if US produced; 0 if not | Body, Interior, Chassis, Electrical & Other, 50%: 2013 AALA% divided by 2.

The Kogod Made in America Auto Index

Rank	OEM	Make	Model	2014 AALA	Profit Margin	Labor	R&D	Inven-tory	Enigine	Trans-mission	Body	Index Score
1	Ford	Ford	F-Series Pickup	0.75	6	6	6	7	11	14	37.5	87.5
1	GM	Chevrolet	Corvette	0.75	6	6	6	7	11	14	38.5	87.5
2	GM	Buick	Enclave	0.72	6	6	6	7	11	14	36	86
2	GM	Chevrolet	Traverse	0.72	6	6	6	7	11	14	36	86
2	GM	GMC	Acadia	0.72	6	6	6	7	11	14	36	86
3	GM	Chevrolet	Equinox	0.7	6	6	6	7	11	14	35	85
3	GM	Cadillac	CTS	0.7	6	6	6	7	11	14	35	85
3	GM	GMC	Terrain	0.7	6	6	6	7	11	14	35	85

One reason that it is important to challenge tech companies such as Google is because of their lack of diversity. As Michael Thomsen wrote in Forbes:

The lack of diversity at Google has… to do with the company’s core structure, which would remain bluntly antagonistic toward behavioral and political diversity….

At Pistis, we will also explore business models that develop good jobs. One business model that we are looking at closely is a privately held, majority employee-owned American supermarket chain based in Boise, Idaho called WinCo Foods. At one store in Corvallis, Oregon, the combined retirement savings of 130 employees roughly comes to an astounding $100 million. And according to a Forbes article:

And that figure is growing rapidly, such that in a few years the average wealth of these employees could easily exceed $1 million. Quite a few individual workers already have account balances above that level…. WinCo has more than 400 front line employees with more than $1 million in their ESOP accounts and hundreds of retirees similarly well set. Each year, it sets aside an amount equal to about 20% of each employee’s pay, in the form of stock, and the value of the underlying shares has risen rapidly, too.

WinCo Supermarket employee Cathy Burch, 42, here with her husband Kevin. In her 23 years at WinCo, she has worked a variety of front-line jobs including checker, shelf stocker, and inventory order.

Most Americans in her situation have either no savings at all or an account such as a 401k containing less than $50,000, but Cathy owns almost a $1 million in stock.

According to Local Dollars, Local Sense by Michael Shuman:

If you don’t want poverty in your community, your businesses must pay living wages with decent benefits. And if you don’t want polluted air, water, and land, your businesses must behave in environmentally sustainable ways.

We will also explore the idea of developing a Business Development Company (BDC) that will prioritize spreading and replicating local business models with outstanding labor and environmental practices in the Metropolitan New York City area. As explained in Investing Answers:

BDCs are similar to venture capital (VC) or private equity (PE) funds since they provide investors with a way to invest in small companies and participate in the sale of those investments. However, VC and PE funds are often closed to all but wealthy investors. BDCs, on the other hand, allow anyone who purchases a share to participate in this market.

Small businesses and startups are the backbone of the American economy, and according to a report done by Tim Kane for Kauffman Foundation:

[W]ithout startups, there would be no net job growth in the U.S. economy. This fact is true on average, but also is true for all but seven years for which the United States has data going back to 1977…. Startups create an average of 3 million new jobs annually. All other ages of firms, including companies in their first full years of existence up to firms established two centuries ago, are net job destroyers, losing 1 million jobs net combined per year.

As politicians go through the political drama of producing budgets, the truth of matter is that the only way to reduce the deficit is by reducing unemployment. According to an article written by Business Insider‘s executive editor Joe Weisenthal:

History is pretty clear on how you reduce the deficit: Get growth, and reduce unemployment.

We ran this chart earlier this week to show how nicely deficit/GDP and the unemployment rate correlated with each other. Throughout these decades tax and spending policies have changed a lot, but it clearly hasn’t mattered. When unemployment drops, deficit/GDP drops. When unemployment rises, deficit/GDP rises. Growth is the only deficit reduction policy that matters.

Given these facts, why do governments at all levels (local, state, and federal) continue to subsidize large corporations? As David Cay Johnston writes in an Al Jazeera America article:

SudsidyTracker 2.0: http://www.goodjobsfirst.org/subsidy-tracker

State and local governments have awarded at least $110 billion in taxpayer subsidies to business, with 3 of every 4 dollars going to fewer than 1,000 big corporations, the most thorough analysis to date of corporate welfare revealed today.

Federal, state and local governments publish exhaustively detailed statistical reports on welfare to the poor, disabled, sick, elderly and other individuals who cannot support themselves. The cost of subsidized food, housing and medical care are all documented at government expense, with the statistics posted on government websites.

But corporate welfare is not the subject of any comprehensive reporting at the federal level. Disclosures by state and local governments vary greatly, from substantial to nearly nonexistent.

It is clear as Jack Dorsey, creator of Twitter and founder and CEO of Square said:

[A] critical aspect of improving the U.S. economy is actually improving the small business economy and making it easier to start a business and to grow small businesses.

So what can local, state, and federal governments do to make it easier to start a business and to grow small businesses? We get an answer from Stacy Mitchell, Senior Researcher at the Institute for Local Self-Reliance. In an article she states the six steps that governments must take to support small businesses:

1. Restructure the Banking System
2. Close Corporate Tax Loopholes
3. Extend Sales Taxes to Large Internet Retailers
4. Get Corporate Money Out of Politics
5. Cap Credit Card Swipe Fees
6. Increase the Small Business Share of Government Purchasing

Why aren’t these steps being taken? Despite the talk, we must consider if politicians are really interested in economic development or is it more important for them to maintain the status quo? Aaron Renn addresses this issues in his post “Do Cities Really Want Economic Development?“

Jane Jacobs once said that “Economic development, no matter when or where it occurs, is profoundly subversive of the status quo.” This, in a nutshell, is why policies and programs that might actually move the needle and generate economic development are not implemented. The politicians, power brokers, businessmen, non-profit executives, etc. all at some level benefit from the status quo. Anything that disrupts the status quo is a threat to them.

And as Michelle Long, Executive Director of BALLE in “The Incentive of Building Local” points out:

A recent New York Times special report described the squandered opportunities of economic development in local communities across America as tax incentives tallying more than $80 billion are handed out to oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains — usually with no concrete benefit, no jobs, no improved economic climate.

[Yet, b]uilding local economies from within — investing in the people and local businesses rooted right where they are — offers profound, long-term outcomes.

And the evidence is in: From Economic Development Quarterly to Harvard Business Review, communities with a higher density and diversity of local, independently owned businesses have more wealth, jobs, and resiliency than communities that rely on large corporations and big box retailers as “job creating” employers. Rather than funneling wealth into a few hands, strengthening local business ownership results in more wealth and jobs for more people, and greater personal accountability for the health of the natural and human communities of which we are a part.