Limit the Government Role in Job Creation to 'Common-Sense Incentives'

As we vault toward this year’s U.S. presidential election, economics dominate the debate.  Shuttered factories and long unemployment lines tell the story of an economy that continues to create jobs at an anemic rate.

My firm recently polled hundreds of people on how to stoke job creation.  The results were a microcosm of the nation’s political debate and whether the public or private sector holds a solution or is more the root of the problem.

Who holds the key to reviving the U.S. economy and creating good, high-wage jobs?  The president?  Congress?  The Federal Reserve?  Private industry?  Our poll of U.S. workers found that the answers are, respectively, “yes, no, no and definitely not.”  

The 84,000 jobs created in June hardly serve as an inspiration for voters to reward either party.  However, our survey found that a substantial majority of workers polled (63%) believe the president has a big impact on job creation.  At the same time, fewer (55%) believe the president, Congress and the Fed can work together to create jobs.  Given the political gridlock that has paralyzed Washington, even this modest majority seems overly optimistic. 

So how do we stimulate job growth?  Nearly two-thirds (64%) of respondents think government spending can play a positive role, particularly in areas like sustainable energy solutions, information technology, and infrastructure. 

The Private Sector

While the respondents showed a surprising amount of faith in government, they were not as confident in the private sector.  Fully 70% of the respondents didn’t think U.S. chief executive officers were “working hard enough” or were committed to creating U.S. jobs.  In addition, the workers were split on whether CEOs would invest their company’s tax savings in hiring. 

Given the choppy economic environment, this viewpoint toward CEOs and corporate management  is understandable, if a bit misguided.  In reality, CEOs are not typically incentivized and motivated to hire Americans -- they must first meet the demands of their shareholders, and in that context the world is their hiring marketplace.  Today’s CEOs are borderless -- first and foremost, they focus on growth, customer satisfaction, quality, and of course profitability.  They will seek talent wherever they can find it that will contribute to these goals. 

For manufacturers, jobs will be created where they make the most sense on a cost and competency basis.  While China has recently been the world’s low-cost, high-competency location of choice, it is now facing rising labor costs as companies competing for talent bid up pay and workers’ aspirations rise accordingly.  At the same time, the United States is becoming increasingly productive and cost competitive, as a combination of tax incentives, a talented and agile workforce and an emphasis on “high-value” manufacturing is beginning to pay dividends. 

While U.S. manufacturing is not nearly as strong as it was a decade ago, it is gaining new strength.  With renewed vitality in the automotive industry, for example, U.S. plants are hiring again. Now, the biggest issue is becoming how to find midlevel workers with the right skill sets  -- a shortage of machinists is a recent example.

While our poll shows that workers believe government can play an important role in driving employment growth, we think the problem is more complex than erecting barriers to imports or discouraging outsourcing. 

As the global workforce is now a reality, the private sector must maintain the freedom to source jobs globally based on market demands.  In this environment, the United States has shown that it can produce more manufacturing jobs based on real economics and can be especially successful when leveraging these economics with thoughtfully crafted incentives. 

On the other hand, incentives that lack economic “common sense” are perilous -- how well various levels of government and the country’s CEOs can align on these views is critical to continuing the hiring momentum, however modest, that is currently underway.     

Bill Westwood is partner and industry leader for Industrial Leadership and Talent Consulting at Korn/Ferry International. Korn/Ferry is a leadership talent development and recruitment firm with about 80 offices in 40 countries.