COMMENTARY

Job Creation Should Be Nation's No. 1 Goal

June 2003

By Donald J. Pfundstein*
for New Hampshire Business Review

Thirty years ago my mother told me that I would get a haircut when I needed a real job. I understood her. She was after two things — one, shorter hair and an acknowledgement that conformity was sometimes necessary. What I didn't appreciate was how visionary the comment truly was.

Concord's focus on the budget will continue through the month of June. The federal Medicaid gods have once again put New Hampshire in a position to finish the state's financial blueprint for another two years. Although we should not underestimate the uncertainties surrounding budget negotiations, Bush's inclusion of Medicaid assistance for the states in addition to the tax cuts certainly makes things easier. With a sound, balanced budget behind us, let's focus on what we need to reengineer our economy.

According to the federal Bureau of Labor Statistics, February and March '03 brought job losses totaling 477,000. April continued the reduction, albeit at a slower pace. The economy shed nearly 50,000 jobs with an additional 60,000 job losses estimated for May. The structural changes underway make the current job shedding even more problematic.

Pick an industry — the changes are enormous and found throughout the economy — airlines, manufacturing, retail, hotels and lodging, finance, brokerage, travel, the list is endless. I recently had everyone in my organization read a short report from a favorite place on the Web that described self-scanning at the grocery store. No. I don't think they need to spend more time doing errands. I asked them to read it because self-scanning is a simple, everyday example of the disintermediation underway.

When a recovery gains pace, jobs are not replaced, in part due to the productivity gains resulting from technology. Some jobs are simply permanently eliminated because they are no longer necessary. The specific tasks are no longer needed or require fewer people to perform them. Other jobs are moved overseas where cost structures are substantially lower than in the United States. Henry Ford created the "$5-a-day man" not due to his humanity, but because he understood the need to have a market for his vehicle.

The consumer has kept our economy going in the absence of business investment. Low interest rates, auto manufacturer incentives and home refinancings have done the trick. But long-term consumer confidence is necessarily tied to the job outlook. How long will the consumer be able to spend while jobs are being permanently eliminated? You don't need a Ph.D. in economics to forecast that the job losses will catch up to the consumer at some point. Yes, liquidity and low interest rates will help, but what the economy really needs is jobs.

Now that we will be getting the budget behind us, it's time to focus on jobs. Our sole economic development effort must be jobs creation. What we do and how it is done needs to be driven by that simple goal. We must create jobs, because everything else is simply treating the symptoms. I'm all for treatment, but we need to invest our energy and resources in a cure.

My mother no longer gives me a hard time about the length of my hair. Now, she thinks it's too thin. You can't win. More importantly, what have you done today to create jobs?

*Donald J. Pfundstein is admitted in New Hampshire.

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