Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Startups Will Define the Future of US Employment

Economics / Employment Mar 15, 2017 - 09:21 AM GMT

By: John_Mauldin

Economics

Research shows that technology has net-net created far more jobs than it has destroyed. A recent study by Deloitte drew on data going back to 1871 in England and Wales and found that technology has been a job-creating machine.

Part of that is because technology increases people’s spending power, which creates a surge in the demand for hairdressers, bar staff, etc.


Going back over past jobs figures paints a more balanced picture, say authors Ian Stewart, Debapratim De and Alex Cole.

“The dominant trend is of contracting employment in agriculture and manufacturing being more than offset by rapid growth in the caring, creative, technology and business services sectors,” they write.

“Machines will take on more repetitive and laborious tasks, but seem no closer to eliminating the need for human labour than at any time in the last 150 years.”

This Happened in Every Technological Revolution

The pattern has repeated in the US and much of the rest of the world.

At least 80% of US workers labored in agriculture at the beginning of the 19th century, but by the middle of that century, the number was down to 50%. Today, it is substantially less than 2%.

And yet we are 16 times more productive than we were 120 years ago.

Seriously, do we bemoan the fact that we’ve lost all those farm jobs? Only if you never had to actually do one of those jobs. And that our food is much less expensive as a percentage of our daily budget? (Unless your spouse forces you to eat everything that is simply labeled organic.)

Do we regret all the people who lost jobs from doing our laundry? Washing our restaurant dishes? Shoveling horse droppings from the street? Oh, you might miss your bank teller, but then you never go to see her/him anymore, do you?

All those jobs are gone.

Is Technology Really the Problem?

So now I am here to tell you that technology is not the problem. As I’ve written before, technology is the solution. Well, actually, I agree it’s the problem if it’s your job.

But the solution is to figure out how to get in front of the technology curve or figure out who is in front of it and get involved with them.

Because, at the end of the day, the data shows that net-net, new job creation comes from small business startups. That is, all of the net new job creation comes from small businesses less than five years old.

Well, hooray! We are still creating 450,000 new businesses a year. Well, except. Except that we are losing more enterprises every year than we are creating. And we have been since the beginning of the Great Recession.

Startups Will Define the Future of US Employment

Part of the problem, as Tyler Cowen describes in his new book, The Complacent Class, is that Americans have seemingly lost some of their entrepreneurial drive.

In the 1980s, new startups accounted for some 12–13% of all businesses. Today it’s 7–8%. If we want to create an economy that is a jobs machine, we are going to have to have more business startups.

Which means that we have to create a climate in which people feel comfortable launching risky new ventures.

Fewer new businesses means that older companies now represent the largest share of US businesses; and all the data—and I challenge you to find any data that contradicts this (seriously, I would like to see it)—shows that large businesses, as a group, are not net creators of new jobs.

They absolutely create new jobs at the front door, but at the back door they are ushering out old jobs. Large businesses are in the business of staying in business.

Large enterprises are net-net destroyers of jobs. For every Google or Apple that is growing its total number of higher-paying jobs, there is a Buggy Whip Corporation or Icebox Corporation that once dominated its industry but is now either defunct or shedding jobs in an effort to stay viable—or else scrambling to change its model and product delivery entirely.

And let’s remember, Google and Apple were once small business startups that for whatever reason (perhaps the genius of their founders) became big and dominant.

The future is not in old companies that are just getting by or fading. The jobs of the future are in new companies that have yet to be dreamed up. But they will all have to be found and financed.

Jobs Come from Blood, Sweat, and Big Money—Not a “Jobs Program”

New-business creation is an extraordinarily risky business. Michael Gerber tells us that 80% of all new businesses fail or no longer exist in their original form within the first five years, and 80% of the remaining businesses no longer exist five years after that.

And every one of those new ventures and the half a million new businesses started every year requires capital. Every $%^&$&^% one of them. Blood and sweat and tears and lots of money. And that money has to come from somewhere.

There are many politicians who think there is a new-jobs fairy. Just give the government more money, and it can create a “jobs program” that will create those new jobs.

Okay, now I’m going to be the guy who told your kids there is no Santa Claus.

There is no jobs fairy. Just call me Mr. Grinch.

Get a Bird’s-Eye View of the Economy with John Mauldin’s Thoughts from the Frontline

This wildly popular newsletter by celebrated economic commentator, John Mauldin, is a must-read for informed investors who want to go beyond the mainstream media hype and find out about the trends and traps to watch out for. Join hundreds of thousands of fans worldwide, as John uncovers macroeconomic truths in Thoughts from the Frontline. Get it free in your inbox every Monday.

John Mauldin Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife