The Job Creator Myth

Today we look at another popular myth: that business owners are job creators. This myth says that we ought to be thankful to business owners for creating all the jobs that sustain us; without capitalists we would be lost.  The capitalist is, in the words of Steven Pearlstein from the Washington Post:

…the misunderstood superhero of American capitalism, single-handedly creating wealth and prosperity despite all the obstacles put in [the] way by employees, government and the media.

Ironically, out of owners, workers, and consumers, it is only the owner that is not strictly necessary for job creation. Any successful business transaction requires somebody to buy a good or service. Consumers and workers are both necessary in this transaction; there would be no work without consumer demand and there would be nothing to consume without workers providing it. Sure, good managers are necessary for large-scale operations, but they’re just a different type of worker.  Even the brilliant entrepreneur is a worker when developing an idea and is no longer strictly necessary once the idea is being produced and sold.

The job-creator myth reflects an annoying, self-serving, arrogant, aggrandizing attitude that ignores all the sources of interdependence between people. The business owner is not a job creator nor are workers owner creators.  Consumers are not job creators either. All three – owners, workers, and consumers – create each other in a dynamic web of interdependence. Nobody deserves credit for this act of creation that resulted from people acting in their own self-interest. (In fact, self-interest should lead the business owner to create as few jobs as possible while still providing a desirable product or service. It would be better to portray the owner as a job restrictor.)

These considerations probably contribute to a certain the-lady-doth-protest-too-much quality to the job-creator argument. Owners know that their role is in essence selfish, but they can’t admit it publicly (although many will probably admit it to themselves). Owners need to constantly shore up the moat around their tenuous privileges, and the job creator myth is just another bit of propaganda to that end.

Thankfully, from time to time sensible words will come from any segment of society. We finish this post with a video of Nick Hanauer, a venture capitalist delivering a TED talk on the subject:

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4 Responses to The Job Creator Myth

  1. elkement says:

    Yes, and the stereotype owner – pictured as the powerful proprietor of the factory – is also turning into a myth. I am a proud owner of 50% of a business run by two owners. However, we are also our only workers and this will not change. This is a based on a decision taken deliberately. I feel that in particular the number of atypicaly owners=workers is growing.

    • No doubt that one person can play more than one role and that there is some simplification in any grouping. It would be interesting to dig up more information on ownership as a function of firm size – I have no idea. I suspect that what you’re saying could be true.

      I wonder, what would you do if your business had the good fortune of generating more demand than you and your partner can handle? Would you keep from hiring and let somebody else satisfy the extra demand?

      • elkement says:

        It happened to us often (more demand than we could handle) and we referred customers to other consultants or simply stated that we could not handle it. We narrowed our niché of expertise every time that happenend and I think this was beneficial both for customers and us. After all, one of the main drivers for starting a business of my own was the freedom to say yes or no to every incoming project request, without having to follow the directives of a manager who needs to make sure you meet the “corporate goals” and deliver enough “billable hours”.

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