A couple of months ago, I ran across a review of The Coming Jobs War that was done by Carl Schramm the well known and widely respected previous CEO at the Kauffman Foundation. His description of the book intrigued me enough that I immediately went over to Amazon and read some preview pages and then downloaded the Kindle version of the book. The premise is that our problem regarding job creation in the US is nowhere near the three million to four million number bantered about in light of a presidential election. In fact, the number is seriously larger, like thirty, that’s right 30 million jobs are needed. His rationale is as follows:
- The US is currently 25% of the global GDP. We are at $15 Trillion and the total is $60 Trillion, which is 15%.
- The Number two country is China at around $8 Trillion. Nowhere near us. Except, their growth rate has been 8-10% per year while ours has been lagging at around 2%.
- The global GDP is expected to grow to $200 over the next 30 years.
You can calculate at what point China could expect to overtake us if we don’t do something to do better than 2% growth per year. So, what is the answer? Create many more jobs especially through an emphasis on high tech start ups. It is well understood that most, if not all, of job creation comes from early stage tech start ups.
How important is being number 1? Being number 2 is not like the old Avis commercials with the tag line “we try harder”. Number 2 means we are no longer the go to country globally and everyone who hates us, will do everything to make our lives unbearable. This is not a pretty picture or one that we should be doing everything we can to fix.
So, what exactly are we doing? I will point at both sides of the Congressional Aisles for this one. Very little is being done within our government to help start up entrepreneurs! Republicans can’t say that focusing on the top 1% is helping since most start up founders are not in that category. They can’t use some of the tools that were available a few years ago to get started like opening five or six credit cards with $10K limits and then maxing them out. They can’t take money out of their houses or their 401K’s. Loans through SBA backed programs? Not for start ups. Bank’s still require positive financial results.
Oh but what about the $1B Karen Mills talked about that was going to go through their existing Small Business Investment Companies (SBICs)? Most applicants to the SBIC programs could not raise the initial capital required by the SBA to start the 2 to 1 matching program. A big deal was made about the successful investment by a new SBIC in Michigan last year. The problem was the SBIC was set up as a Mezzanine Fund, or focusing on later stage companies and not start ups.
Now the government did do lots to get funding to our banking system, Wall Street and the Auto Industry; hundreds of billions of dollars to companies that did not create one net new job with all that cash. At the same time, the real job creators get very little help. I just don’t get it!
In any event, get the book and give it a read. If you get as excited as I did when I read it, you might start planning what you can do to help. I have been and will be posting over the next few weeks of some things I am not involved in.
Also, let me know your thoughts on the subject and any ideas you might want to share.