Politicians of all stripes promise us to trust them to create jobs. Indeed, Gov. Perdue has attempted to claim the mantle of “jobs governor,” and continues to insist that job creation is perhaps her top priority.
But has anyone asked the Governor how jobs are created? I suspect her response, like most politicians, would be akin to a deer in the headlights.
I attempt to explain the basic foundations for job creation in this article published today in the Fayetteville Observer. Here is a slice:
More to the point, an entrepreneur creates jobs anticipating a profit-making opportunity. Whether he is projecting increased future demand for an existing product, or demand for a newly created product, the move is speculative and involves a certain level of risk.
Entrepreneurs hire workers when they believe that the cost of paying the new employees will be outweighed by the increased revenue collected by the added productivity generated by them.
More often than not, however, the new employees do not work in isolation – their labor is combined with complementary factors of production. For instance, the added cashier may require an additional register, or the new R&D engineer needs the appropriate computer software to design a new product.