this video is made in partnership with the daily upside a free business and finance newsletter
check out the link in the description to learn more when you hear the words job creator one of
two things come to mind according to a poll i ran last week about 70 percent of you will think of
an entrepreneur running a company that gives jobs to workers who will then thanks to them be able to
afford to put food on the table and a roof over their heads the other 30 percent of you will be
thinking of a fat cat business owner who uses the fact that they employ people as an excuse to lobby
for lower taxes looser business regulations and less severe punishments for their actual criminal
behavior jobs and job creation is a highly politicized issue with some of the most polarizing
people in the world at the center of the debate depending on who you ask elon musk is either a
genius or a fraudster jeff bezos has given work to millions and pushed for a 15 minimum wage but
he has also allowed systems to exist that make the same workers piss in bottles to keep up with
hourly quotas both sides of the aisle have created a myth of what a job creator is and both of them
are kind of wrong rich business owners and the companies that they run do indeed employ people
and provide financial stability to most americans who rely on a salary to support themselves and
their families on the opposite side of the same coin they only do that because they really need to
given the opportunity they would prefer to be job destroyers but a variety of factors are making
that impossible for now there is another level to this argument that most people ignore as well
which is do we really even want more jobs if you have watched my video on staff loyalty the
three-day work week or [ __ ] jobs you might realize that work for the sake of work isn't
something that should be encouraged so to see what value job creators really bring to society
it's time to learn how money works which was made possible this week by the daily upside the daily
upside is a free high quality email newsletter with a specific focus on finance and business
it was actually started by a former investment banker who quit after nearly a decade on wall
street to start the venture the daily upside provides articles that are clear concise
and go further than the headlines and sound bites that traditional financial media is accustomed to
they also share fascinating financial stories that you won't find anywhere else
i've actually used a lot of these stories as a groundwork for entire videos here on my channel
if you are making investments working in finance or just have an interest in business
you will be shocked with how much more in tune you will be with the world around you if you switch
out 5 minutes of scrolling through instagram with 5 minutes of reading through a high quality
newsletter like the daily upside the best part is it's completely free and only takes a few
seconds to sign up with my link in the video description below the sba reported that there
were 31.7 million registered small businesses in america as of july of 2021. of those 31.7
million 25.7 million or over 80 percent had no employees whatsoever small businesses make up 99.9
of all businesses in the states and what this shows is that giving out jobs is difficult for
most businesses the first obstacle is of course the direct cost of employing someone a full-time
employee that is just getting a minimum wage will still cost a business fifteen to thirty thousand
dollars per year depending on the state that they operate in the second obstacle is the red tape of
legally hiring someone most business owners would need to hire the help of an accountant to make
sure that wages taxes and insurance are all being paid for properly for the sake of the business
and the employee this adds significant additional headaches and expenses the third obstacle is that
employees are very unpredictable a small business could invest lots of money into training a new
staff member just to have them quit once they are at a point where they are worth the investment
these three reasons are why small business owners simply choose to do the work themselves
so for now let's just focus on the large companies the businesses with over 500 employees on their
payroll these are the businesses that are normally at the center of the debate about the role of a
job creator anyway the same obstacles exist for these companies as well but given their size
there is no way around employing people amazon is investing billions of dollars into systems
to reduce their dependency on labor in their supply chain they are even experimenting with
the idea of completely unmanned store locations other companies are pursuing self-driving cars
which have the potential to replace bus taxi and truck drivers so why are these job creators trying
so hard to get rid of jobs most people assume that the end game of this automation research is to get
rid of the expense involved in hiring workers if you replace a worker with a robot you eliminate a
salary and save the company thousands of dollars every year the problem is that these robots can
cost millions of dollars to install and many of these companies have already spent billions on
research without yet replacing a single job the goal for a lot of these businesses is actually to
get rid of the unpredictability of workers and to put the money towards a capital asset rather than
an ongoing expense if you pay a million dollars for a new piece of equipment you still have a
million dollars in assets on the balance sheet it's just been transferred from cash to equipment
this equipment will have a tax-deductible depreciation schedule and return predictable
performance over its operating life if you spend a million dollars on salaries then that's all an
expense which means that the value is going to the workers not being kept in the business investors
would obviously prefer the former option even if it's not necessarily the best financial decision
okay so maybe the almighty job creators are unwitting heroes but that shouldn't really matter
should it whether they like it or not these people have built companies that are employing tens of
thousands of people well okay but is that always a good thing i know he would have never expected
this but van cram's comment in my recent community post was actually very insightful i will use a
more community friendly example but the same point applied if i go to a shop and make a mess someone
will need to be paid to clean that up that is a job that is being created if i vandalize city hall
then the local government will pay a contractor to remove the graffiti and maybe pay for a security
guard to make sure it doesn't happen again that is a job being created the distinction here is that
these jobs are being created to fix or otherwise avoid the destruction of value rather than
participate in the creation of value economists call this the broken window fallacy david graber
an anthropologist and author of the book bull jobs would call this type of work duct taping
no matter the label i think that we can all agree that we would all be better off if these
jobs weren't needed there are certain companies in america today that are creating the same type
of jobs casino operations weapons manufacturers coal mines and even mercenary outfits will be the
first companies to talk about all the jobs that they create some of these companies will even
use the workers that they employ as direct leverage over the government at entry level
they intentionally spread out their facilities all over the country so that they can threaten to lay
off workers if they are not awarded government contracts sometimes the jobs that are better off
not existing are harder to spot my day job is investment banking many of my colleagues have
advanced degrees in medicine physics chemistry and computer science they choose to work in the
industry because they would make more money as a quant than they would as a scientist
i understand the choice that they made but they would do more good for the world if their
investment banking jobs did not exist the truth is you probably believe one of two myths about
job creators you either believe the myth that they are heroes creating livelihoods for millions of
their fellow americans or you believe the myth that they are fat cats profiting off labor of
exploited workers who they then turn around and hold up as an example of good they are doing
the truth is the people that we normally think of as job creators don't really create jobs at
all they create systems jeff bezos created a system for a convenient online shopping
platform and a web hosting service this system extends beyond just the amazon corporation itself
and includes subcontractors legal firms partner businesses and governments all over the world
jeff bezos has either directly set up these systems or was responsible for employing someone
who employed someone who hired someone to set up the systems that make amazon run jeff is no
longer the ceo but when he was he would work with his chief operations officer who would hire and
oversee regional directors who would manage sales representatives who would sell server hosting to
businesses a byproduct of this system is that multiple layers of employees were hired and a
separate business was able to launch their website without needing to invest in server hardware
if jeff could create a system where profit was made without these other two side effects he would
surely do it because in the eyes of a businessman these other two outcomes are just cost centers
the wealthiest businessmen in the world don't create jobs they create systems some of those
systems require a lot of manpower and some of those systems need very few people some of these
systems do wonderful things and greatly improve our everyday lives and some of these systems serve
only to benefit themselves some of these systems do great things while employing very few people
and some employ millions while harming society at large so the next time a ceo or a lobbyist gets
up in front of congress and talks about all the jobs that their business creates make sure to
remember that given a second chance they would do away with every last one of their salaried
employees the only problem is they haven't figured out how to yet now if you're wondering
what value these lobbyists add to society make sure you check out my video where i try my best
to defend the role of public lobbying here in the states thanks again to the daily upsides
free email newsletter for making it possible for everybody to keep on learning how money works