Does Government Create Jobs

On November 1, 2013, Andrew R Thomas Associate Professor of Marketing and International Business at the University of Akron in the Great State of Ohio has in 13 short paragraphs taken apart the tea party’s mantra that government does not great jobs. In these short paragraphs he also establishes how the SNAP/food stamp program is in the end a benefit to the retail industry our nations largest employer. Keep in mind that retail is an industry with profit margins of 2, 3 or maybe 5 percentage points.

In an article that was published on Nov 1, 2013 in The Art of Business Professor Thomas points out that the Federal Government is the most important customer in the retail market. At a time that certain segments of our government are fixated on budget cuts has a way of improving the state of our economy, it is the Federal Government that will spend one trillion dollars in the retail market place. Our government will buy many products. These products are not limited to military supplies. But will include toilet paper, software, paint, benzene, clothes, books, and food. In comparison Walmart the worlds largest retailer purchases and resells less than forty percent of what our government contracts for every year.

Furthermore Prof. Thomas astutely observes that many of the fortune 500 companies with CEO’s who are fond of railing against our elected officials nevertheless when asked will tell you that their biggest and most important customer is Uncle Sam.

Aside from the obvious that without government purchases the military industrial complex would be much less profitable and a whole lot smaller. Another way of saying this is that without government purchases there would be hundreds of thousands if not a few million skilled employees without work. This would result in a smaller government and you can translate that into a smaller economy with a lot less opportunities for profits and meaningful employment.

But the biggest purchasers of retail products that include technology, software, computer hardware, support services along with food, pharmaceuticals, and medical treatments is not the Pentagon but Medicare and Social Security.To cut these consumer prepaid programs would inflict pain on senior citizens and retailers by the millions and hundreds of thousands respectively.

As for food stamps, today at a time when 42 million people, 40 percent of whom are children, are receiving a cut in their food rations we must remember that once again a draconian cut in programs or services is also a cut in the profits and viability of retailers. We as a nation are taking food off the table of our most vulnerable and in so doing we are also making it much more difficult for people to find the work that would allow them to get off of government assistance.

In cutting government purchases, retailers cannot hire and grow their businesses as they would like. This contraction of economic vitality ultimately results in less income which will translate into less taxes due to all our levels of government. This is a very slippery slope with a downward projection. Once started, the road of thoughtless deficit reductions will only serve to need to cut more in the year ahead. This is not a formula for a sound and job promoting economy.

To reduce the size of government entitlement programs we must first grow the size of our economy. This is done not by cutting the amount of goods and services that are purchased but by supporting our small business and large corporate providers so that they may be profitable and grow. With growth comes work, and to perform the work that a growing successful business requires, you must hire. In hiring jobs are created.

Do food stamps create jobs? Just ask the retailer or the farmer. With food stamp sales to bolster their profit margins would they hire more staff? Without a doubt.

If they lost their food stamp business would they have to reduce staff? Most likely!

Does government spending create jobs in the private sector? Just ask any fortune 500 CEO. Could they still maintain their current head count without government purchases? I doubt It.

Submitted by Joseph Oddo

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