The Coming Jobs War

March 21, 2012
Thumb_small_randyfitch
Medford, OR
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The Coming Jobs War

I recently read a book written by the CEO of Gallup, Jim Clifton, titled The Coming Jobs War.  I read the book on the way to Las Vegas for one of my kid’s soccer tournaments, and haven’t been able to stop thinking about it since.  I've read and listened to droves of studies on the future of the US Economy, but this book hit home more than any.  I hold a passion for solutions derived through unconventional thinking and this is the first economic study that provides just that . . .

First of all, Gallup’s studies are vast.  When they do a poll, they don’t test a few hundred, or a few thousand, but hundreds of thousands, and in this poll, across 150 countries.  And, I can testify to the fact that most of the time what they learn from these studies does not fit the conventional wisdom of today’s society.

A Few Takeaway Points of the Book:

According to Gallup, 52% of Americans believe China is the world’s strongest economic power.  In reality, of the world’s overall Gross Domestic Product (GDP) of 60 trillion, the US generates roughly 25%, nearly 3 times that of China.  However, China’s GDP is growing at a mind-numbing 8% to 10% while we are growing at a much flatter rate of around 2%.  This means at the current rates China will far exceed the US in the next 30 years becoming the world’s largest economic power.  Of the overall predicted world GDP of 200 trillion in 2040, China will have the lion’s share of around 70 trillion while the US is predicted to grow to about 30 trillion.  And, good jobs go to the country who leads the world’s economy.

We Need More Good Jobs

According to Gallup, the world’s values have changed over the last generation.  Thirty years ago people desired financial stability, peace, shelter, and freedom.  Now, what the world’s people want is a good job and a good job for their children.  Why this matters is that GDP is controlled by people’s comfort level with spending.  Seventy percent of our country’s GDP is consumer spending.  When people have a good job they feel it’s safe to spend and GDP rises.  When they don’t have a good job they don’t spend and GDP falls.  Thus the key to faster GDP growth is more consumer spending which requires more good jobs.

Government Job Creation

Can the government create these good jobs?  In the news you may have heard about shovel-ready, stimulus package funded, construction jobs.  In my opinion, this is like placing a Band-Aid on a cancerous tumor.  The Feds currently take in about 2.6 trillion in taxes each year and are spending about 3.7 trillion.  Gallup predicts this may likely require a cut of roughly one-third of spending to become sustainable.  That’s right, a one-third cut to Social Security, Medicare, Medicaid, the Military, and a cut of one-third to the number of government employees . . .  No, higher taxes or borrowing more of China’s money won’t fix this problem.  According to Gallup, this will only make the explosion bigger when then train finally derails.  

The Solution is Local

As alarming as the results of Gallup’s study, their fix will likely surprise you more.  While you may understand government spending cannot sustain job growth, you may have held the belief, like myself, that US innovation is the solution.  Though this is part of the solution, it is not the driving factor.  We have droves of good ideas as a result of billions spent in R & D that will never see the light of day because they lack one special key component to make them profitable—a great entrepreneur.

Great entrepreneurs are the key to our climbing out of this hole, entrepreneurs investing at the local level. The Coming Jobs War predicts it will take heavy investment by key entrepreneurs at the local level to spark the GDP growth needed to stay ahead of China.  When our best entrepreneurs invest in their new ideas in their home towns in hundreds of cities across the US, the tide will turn back in our favor.  Rather than study complex economic models, we need to study great entrepreneurs.

Government spending is unsustainable and has led to a change in our social philosophy from a capitalistic to an entitlement mind-frame.  While our grandparents understood you had to earn your keep—period, many now believe they are entitled to better simply because they are a US citizen.  One example is our health care system.  Health care costs are twice what they should be at 2.5 trillion per year, which equals approximately one sixth of our total economy.  One simple solution:  we need to get in better shape!  One-third of our population maintains a healthy weight, one-third is overweight, and one-third is obese.  Gallup shows if an additional one-third of Americans were in good shape, our health care costs would be greatly reduced into manageable levels.

I, for one, am not terribly excited about my kids and their kids living in a nation that is in second-place, which no longer leads developing countries into democratic systems. When China leads the world’s GDP, the other countries of the world will look to China, not the US, as a model for success.  And, just as the leadership of the US has pushed China towards civility, democracy, and environmental protections, the opposite will be the case if China leads . . .

As an entrepreneur in the construction industry, I realize more and more the success of my company goes beyond just making a living for my family, but has an impact, maybe ever so small, on the country our kids and their kids will inherit someday.

Best,

Randy Fitch.

 


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Comments (11)

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  • Thumb_flashwebcoverphoto
    flashheatingandover 7 years ago

    I hear you homey. So, I hear you want your company that will pass generations. Good for you. You hiring somebody, a young person? Just trying to lead by example to the youngsters myself. Some of the attitudes really, I mean really, need an adjustment.

    Biggest pet peave, enployy/helper, staying in the car while shopping for supplies......:(... Gonna have a talk about that. The clockwise, counter clockwise thing is a trip.

  • Thumb_kc-remodeling
    kcremodelingover 7 years ago

    We just need to stop buying so much crap from China.

  • Thumb_avatar20251_1
    clevemanover 7 years ago

    The way it was raining here yesterday, we were going to be at the bottom of a 30' sea in a matter of months. That's what is wrong with taking some figures and extrapolating the future.

    Back in the 80's, Japan was taking over the world.

    Can someone remind me what was wrong with the Soviet Union and Red China for all those years? Did we do the cold war so that the price of copper would go up through the roof and we could import cheap consumer goods from China?

    Still, our social & economic system is ever-changing and provokes a fair amount of fear. It must have been crazy during the industrial revolution, then we involved into the service sector (tertiary economy). No one bothered to teach me what comes after the tertiary economy, because no one knows.

    Maybe the cost of living continues to increase so much (real estate and fuel prices) that people will migrate back to the smaller towns from the metro areas. If you can live in a town in a home which you buy for $60,000, then you can get by with an income 1/3 of what you used to need, right?

    Or maybe the american system will find another way to keep incomes rising. Send the wife to work, borrow money to keep consuming, never retire, spend any inheritance, stop having children. Consign 3/4 of the workforce to work for minimum wage retailing cheap imports from abroad and bask in the sunshine as our infrastructure crumbles?

    Time will tell.

  • Thumb_astros
    BrandConstover 7 years ago

    Posted by: kcremodeling

    We just need to stop buying so much crap from China.

    More like our government needs to stop borrowing money from china!

  • No-avatar-62
    fjnover 7 years ago

    If you truly hold a passion for solutions derived through unconvential thinking,as your first paragraph stated.Read the book MONEY AND THE LAW OF ATTRACTION by ESTER HICKS.By the way stop posting about the problem,attention to problems real or percieved,only expands and extends them. What you think about ,you bring about. This sir,is a unconventional idea.

  • Thumb_flashwebcoverphoto
    flashheatingandover 7 years ago

    The solution is simple. We all need to quit taking the cheapest option.

    When we buy cheap air line seats, air lines take cheapest measures as well, it's all anatural circle. If we would quit looking for loopholes in various programs, and do the right thing, the ship would sail smoother

  • Thumb_john-ferrughelli_300633
    JohnFerrover 7 years ago

    Posted by: flashheatingand

    The solution is simple. We all need to quit taking the cheapest option.
    When we buy cheap air line seats, air lines take cheapest measures as well, it's all anatural circle. If we would quit looking for loopholes in various programs, and do the right thing, the ship would sail smoother

    Hah, and how are people going to stop taking the cheapest option? That's like asking your child - so do you want spinach or ice cream for dinner? The answer will never change.

    Within the next 30 years if China overtakes us, then we'll have more jobs because then China will outsource everything to us.

  • No-avatar-62
    Splinter handsover 7 years ago

    Posted by: flashheatingand

    The solution is simple. We all need to quit taking the cheapest option.
    When we buy cheap air line seats, air lines take cheapest measures as well, it's all a natural circle. If we would quit looking for loopholes in various programs, and do the right thing, the ship would sail smoother

    Hit the nail on the head there, people 90% of the time go for the cheap it seems. No regards to having to replace/ rebuild/ repair 10x for the cheapo. Look at Schmos, Home Cheapo, Wal-mart for example, that is how they got where they are and why China is gaining so quick, no one cares about quality anymore just the lowest price. Hopefully things will change soon and people start to realize they are not getting a better deal by buying junk or hiring hacks, in the long term it costs more.

  • No-avatar-62
    Splinter handsover 7 years ago

    Posted by: MarketingPros

    Hah, and how are people going to stop taking the cheapest option? That's like asking your child - so do you want spinach or ice cream for dinner? The answer will never change.
    Within the next 30 years if China overtakes us, then we'll have more jobs because then China will outsource everything to us.

    And when the child gets an upset stomach from having ice cream for supper they learn their lesson and don't do it again. The majority of the US population have not learned their lesson yet, give it time and they will, it may be too late by then and too much "damage to the tummy" is the problem.

  • Thumb_flashwebcoverphoto
    flashheatingandover 7 years ago

    Posted by: MarketingPros

    Hah, and how are people going to stop taking the cheapest option? That's like asking your child - so do you want spinach or ice cream for dinner? The answer will never change.
    Within the next 30 years if China overtakes us, then we'll have more jobs because then China will outsource everything to us.

    Interesting thing, is that the rest of the labor rates in China and elsewhere have gone up so significantly and with the cost of fuel going up, it's not so beneficial to manufacture abroad....(So I hear. Heck, I am too busy worrying about my own gig to actually take time to fact-check)

  • Thumb_flashwebcoverphoto
    flashheatingandover 7 years ago

    Just reading the second to last paragraph about how everybody will copy China. What's wrong with that? They do have game. As for the civility thing, well, it's not as though we have that thing all figured out ourselves.

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