Five Myths About How to Create Jobs

Manyika, J. & Auguste, B. (2010). Five myths about how to create jobs. The Washington Post, Feb. 7, 2010. Retrieved April 20, 2010 from: http://www.washingtonpost.com/wp-dyn/content/article/2010/02/05/AR2010020501445.html

This article was originally published in the Washington Post and reprinted on McKinsey Global Institute’s Web site. The authors discuss the current unemployment situation the country is in and the myths that surround this subject regarding job creation. President Obama has recently announced that job creation will be the number one focus of 2010 and has earmarked $30 billion of repaid bank bailout money to go toward a small-business lending fund. Additionally, the government has taken other measures, including tax incentives, infrastructure projects, and efforts to increase exports to help create more jobs. The authors list and describe five common myths about job creation that employers and employees should understand. 1. Surely there is a quick fix. The authors state that quick action is important but with the US economy losing 7 million jobs in the past two years, it will take several years to get back to where we were. 2. The key to boosting employment quickly is to help small businesses. They state that new and existing jobs come from both large and small companies, almost equally. 3. High-tech jobs will solve the problem. They state that this sector is an important part of the solution, but it is too small to create the millions of job needed in this economy. It will take the bigger sectors like retail, wholesale, business service, and health care to make a big dent in the unemployment. 4. Higher productivity per worker kills jobs. This is not true on the macro-level; higher productivity can eliminate jobs in a certain business environment in the short term but spurs long-term gains in the economy as a whole. 5. Increasing exports will revive manufacturing employment. This is only true in some industries, but not a net benefit to the economy as a whole. The authors state that reducing unemployment is not mainly done with regaining lost jobs but it is more about creating jobs in other sectors. They also state that net growth in new jobs does not come from manufacturing, but from the service industries. This article discusses an important subject that managers, students, and politicians should all understand