Risky Business

B: Let me be clear about one thing: as a businessman, I don’t care about creating jobs. I do not. No businessman in his right mind cares about creating jobs. Even people who work in staffing don’t create jobs, they fill positions.

But business isn’t in the job-creation business. Business is about providing a good or a service for a fee. The reason businesses hire is because they want to be able to provide more of their goods or services for an increased fee. None of this should be surprising yet.

Negative outcomes, in particular a business operating at a loss, are referred to as risk. Businesses look for favorable circumstances to make sure they minimize risk. The easiest way to do that is to ensure that operating costs, the money it takes to keep a business going, remain low.

There are a lot of factors. Taxes, including corporate taxes- which is the main reason most US corporations were incorporated in New Jersey and pay taxes there. I happen to live there, so it’s simply coincidental that my companies are based there. Local cost of living, which affects wages. You can pay someone significantly lower in Idaho than you can in New York, and maintain a competitive standard of living.

But the single biggest factor is the health of that business’ sector of the economy. The HD TV market is booming, despite the recession; it isn’t like Sony is going to lay off people who build TVs just because the newspaper industry is dying. And by health I mean a strong amount of demand for the product. Recession-proof industries, as they’re sometimes called, usually have to do with fantasy and escape, TV, movies, comics. People spend as much or even more on their entertainment because it helps keep them from wallowing in the fear and uncertainty that exists in other parts of their lives.

But the entire reason for a business to exist is to make money. If creating jobs can help that business make more money, or more accurately, when, that’s when jobs will be created. Corporate profits are near an all-time high, corporate stockpiles of cash are at an all-time high. The only thing missing, really, is confidence, and that’s building. When businesses are confident that their spending won’t create products without sufficient demand, the business cycle will resume. With great haste.

DI: What about the minimum wage? There’s criticism that that has adversely impacted job creation.

B: If you want to purely create jobs numerically, yes, you could cut the minimum wage. You could also change the way that labor laws work, making it more cost-effective to employ more part-time workers as opposed to full-time employees. You could “create” a lot of jobs that way. But the jobs wouldn’t pay a living wage. They wouldn’t provide full-time employment. And they would externalize costs, such as healthcare, onto the community. It’s important, when thinking about jobs, to remember that quantity and quality are distinct, here.

The effect of the minimum wage on businesses is it slightly raises the bar for new hiring. An employer who might be able to profitably employ someone at less than minimum wage will have to wait until their profit margin increases enough to pay the minimum wage instead.

But I’d like to address the accusation, now ridiculously part of the name of a law that’s passed the House, that the healthcare bill is “job-killing.” You know what kills jobs? Not knowing if you’ll be able to keep offering employees healthcare. Because that’s a really big deal, and it’s here where that word uncertainty crops up again. Let’s say you hire on three new workers, and in one year, or five, if healthcare costs continue to rise, you’re suddenly faced with either cutting your workforce or cutting healthcare. Firing workers cuts profit, but getting rid of healthcare is likely to lose you your best people, which will not only shrink your workforce but ensure that the remaining workforce is less efficient. In the long run that could cost you more.

Healthcare reform was an attempt to bend the cost curve. Basically, healthcare has been getting more expensive for a long time, so the law was an attempt to shrink the size of that expansion. And this wasn’t just a dewy-eyed liberal social program, either. When you look at budget projections, the single factor that threatens our nation’s financial stability more than any other is healthcare costs- mostly for seniors. The law is working to push down costs. And keeping costs down makes hiring more attractive.

And the law that passed isn’t perfect, but no law ever is. The best path forward is usually to make amendments, to change the things that don’t work well while preserving the things that do. But if Republicans came up with a good, common-sense plan, if they found the common ground that I think exists on healthcare and offered to replace the PPACA with it, I have no doubt the Democrats would jump at the chance. But I suspect their preference is, as has typically been the case, for no regulation at all, that they’d like to get rid of reform and go back to the status quo, which isn’t sustainable.

It’s funny, because Republicans demonized the healthcare law for including death panels which didn’t exist, but their push to destroy the law could easily put us into a position where insurance company bureaucrats do sit on death panels, deciding who is worth saving. And I don’t mean to fear monger, there; at some point I think saving a human life becomes too expensive. And to be realistic, medicine is an exhaustible good in a lot of respects. So deciding how best to allocate those resources is an important question. But I think it’s a question that we as Americans, that we as consumers and premium payers, deserve to be a part of answering.