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Job Numbers are Synthetic

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While the government makes claims of a job recovery the markets don't agree. The governments hiring of 411,000 temporary census workers made a small dent in our enormous jobs crisis but should those jobs even be counted? These jobs don't produce revenue, they don't create new products or services, they can not be sustained and are funded on the shoulders of tax payers. While these jobs make the numbers look like they are improving they will not produce revenue.

Why are businesses not yet hiring? Because they are not being rewarded to add jobs and will not do so until they can justify the added expense that comes with an expanded payroll. In the 'real world' additional payroll demands additional revenue produced from increases sales. The government's only revenue is taxes and when they create jobs you get taxed. Those jobs that were used to pump up the jobs numbers are expenses to each of us. I don't know about you but if I am going to pay for job creation I would like to get something for my money like, roads, bridges and infrastructure.

Until businesses are rewarded for adding employment, job numbers will continue to suffer.
Add to this, extended unemployment, again funded by the taxpayer- and the situation only worsens. The reality is most businesses are making more money today but the individual worker is not! Fast forward to when the unemployment benefits finally cease, taxes are increased on all of us and watch middle class American continue to suffer despite the recovery.

Despite the impact of temporary census jobs more than 29 million Americans are still without work or forced into part-time work -- that's a real jobless rate of 16.6% (BLS U6). (Leo Hindery Jr.'s more precise estimate is 30.16 million for a jobless rate of 18.8 percent.) Nearly 7 million people have been jobless for over 26 weeks (the "long-term unemployed") -- more than at any time since the Great Depression. We still need more than 22 million new jobs to get us anywhere near full-employment.

Businesses are making money but not hiring. Why? Because the reward is not there. Until government provides rewards for hiring rather than rewards for unemployment and funding jobs that don't produce revenue the job numbers will be problematic.

In the ideal free market, the price of labor determines the amount of employment, or so the theory goes. The new reality is the ability to added employment to produce new revenue not the price of labor determines the amount of employment. The old formula was if the price of labor goes down, jobs will be increase but who wants to take a lower paying job when they can stay home. Businesses don't care how inexpensive the employment is but how much revenue additional employment can create!

Quick fixes like adding 411,000 non-revenue creating census workers cost 90 million and will not change the economic conditions because nothing new is being created. Health care and unemployment benefits don't create jobs they just cause us to increase taxes. If you are going to fund activities make sure you are funding activities that actually create products, services, roads, bridges, infrastructure, and new industry. How much infrastructure could 3 trillion build?

It's time to square up to the jobs crisis as it won't go away by itself. The key to solving the crisis? Move money from handout programs to creation programs. Reward businesses for hiring rather than rewarding people to remain unemployed. If the government is going to spend massive amounts of tax dollars lets make sure it actually creates something and is not just a handout.

Grant Cardone, Best Selling Author