Friday, October 16, 2015

How To Increase Employment

In today's WSJ, a good, basic primer on job creation from an expert practitioner of the subject, Andy Pudzer, CEO of CKE restaurants. Mr. Pudzer would certainly make the Bernie and Hillary list of Hated Millionaires and Billionaires despite (because of?) the enormous good he provides society.

In September the labor-force participation rate—the percentage of Americans employed or actively looking for work—continued its decline under Mr. Obama, hitting 62.4%, a low last seen 38 years ago during the Carter administration. The rate has been stuck below 63% for 18 consecutive months. For prime working-age Americans—those between 25 and 54—the rate is 80.6%, the lowest figure since 1984. Nearly six million Americans are “not in the labor force” who “want a job now.”
After more than six years of “recovery,” about 2.5 million more people are working than were employed when the Great Recession began in December 2007. However, the employable population has increased by about 18 million people—seven times the number of people who found jobs.

Even the bump in employment reflects economic weakness. Compare September’s jobs numbers with those from December 2007: 230,000 more people were employed full time and more than two million more people were employed part time. In other words, 90% of the increase has come from part-time employment. About six million Americans are working part time because they can’t find a full-time job.

...Since the problem is too few jobs, it is important to understand who creates jobs. At my company, CKE Restaurants, for example, our franchisees are small business owners who furnish entry-level jobs and management careers every time they open a Carl’s Jr. or Hardee’s. Franchisees generally invest more than $1 million to permit, build and equip restaurants, creating jobs for architects, attorneys and construction workers.

After opening, each store creates about 25 permanent jobs within the restaurant as well as ancillary jobs maintaining, advertising and supplying food and paper products to it.

Our approximately 3,000 domestic restaurants (90% franchised) spend more than $1 billion on food and paper products a year. That creates jobs for everyone from the farmers who plant the seeds to the truck drivers who deliver the ingredients to our restaurants.

CKE also spends about $175 million a year on advertising, great for actors and workers at ad agencies, as well as radio and TV stations. We spend $150 million annually on capital improvements, remodeling restaurants, and purchasing new equipment. This spurs opportunities for construction workers, equipment manufacturers and more. Then there’s the roughly $100 million put toward annual maintenance. That means jobs for window washers, air conditioner repairmen and landscapers.

These workers in turn spend their incomes on food, clothing, housing, health care, education and entertainment—supporting even more jobs. The more restaurants the company builds, the more jobs and the more growth in local economies. Collectively with our franchisees, CKE provides employment for more than 70,000 Americans and supports jobs for tens of thousands of others outside the restaurants.

This engine of economic growth applies to every part of the economy. Whether Ford, Apple,  Caterpillar, Wal-Mart or Coca-Cola, the web of job creation is the same. And so if a politician wants to help workers win a raise, he should help businesses add jobs by simplifying the tax code, enacting regulatory reform and replacing ObamaCare with something that works.

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