Deloitte University Press: Corporations need to start bringing those jobs back and rethink the relationship between capital and labor

[mota bhai 2,675]

For-profit corporations are increasingly being judged on the basis of how many and what type of jobs they create

Published September 5, 2013

Traditionally, corporate leaders haven’t had to think about job creation as a core component of strategy. Jobs were an input to your operations, not an output on which your success would be measured ... The presumption for corporate leaders and for society as a whole was that if businesses focused on creating value, jobs would naturally follow. When and where that equation faltered, and when new jobs didn’t materialize, it was the responsibility of government to address the shortfall. Now, the equation isn’t just faltering, it’s broken; in an increasingly globalized and information-based economy, value production has visibly less and less immediate connection to job creation. Moreover, everyone now expects corporations to address the problem.

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Employment has, of course, always been important to societies as well as economies. It is as much a source of individual fulfillment and meaning as it is a foundation of social stability and an engine of tax revenue ... No surprise, then, that for most citizens in most countries, the availability of good jobs is the most important measure of an economy’s health.

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There is a growing awareness of just how crucial jobs are to social order and psychological well-being. In recent research studies, unemployment has been clearly shown to cause serious depression and anxiety. Beyond the financial strains that tear at the fabric of families and communities, an inability to find work undermines individuals’ very sense of identity. Particularly troubling are the effects of long-term unemployment, with the average duration of unemployment in the United States hitting new levels during the recession.

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Experienced workers see their skills erode, while many new entrants fail to gain a foothold. In some countries, youth employment has reached such shocking levels that many worry about a “lost generation” of labor—and of people via migration. As the focus has shifted to jobs in almost all major economies around the world, it has become one of the biggest issues, if not the No. 1 issue, on the political agendas of leaders and political candidates.

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Betsey Stevenson, the US Labor Department’s chief economist, is expressing a widely felt nostalgic point of view when she complains, “Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice . . . That’s disappeared. Profits and efficiency have trumped generosity.”

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Many business leaders have begun to see that they should step up their game with regard to job creation—and that doing so is wiser than waiting for government and other stakeholders to up the game on them.

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Put job creation squarely on the strategy agenda. At one level, factoring job creation into strategic decision making is as simple as asking the question about each major strategic proposal: How will this affect jobs—and not only their sheer numbers, but their type, quality, and location? The point is that a positive outcome will likely have a material effect on the company’s future prospects. These are considerations that can dramatically change the decision-making equation when it comes to critical investment and location choices. Reshoring, for example, can begin to make sense—not as a reversal of globalization but as a rebalancing of it.

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Shine a spotlight on skills and flexibility. Media coverage and political rhetoric often seize on relative wage levels as the reason for job migration—almost certainly because they are highly emotive and easiest to compare ... The real situation is that labor wages account for a very small percentage of the cost of many products sold today, and producers are increasingly unlikely to choose facility locations based on such marginal savings. More important than cheap wages are factors such as flexibility. In China, for example, what Apple values most in its partner Foxconn is its ability to quickly bring more semiskilled workers online when a need for them arises. When Apple made an eleventh-hour design change to its iPhone, Foxconn roused 8,000 workers from onsite dormitories at midnight to take their places at an overhauled assembly line rather than fall behind in production. While a scenario in which American workers become so easy to mobilize is unlikely, greater flexibility on US soil could come from a more robust pipeline of mid-level engineers with redundancies built in. A serious commitment to community colleges, technical trade schools, online education, and their linkages with job training programs could help achieve this pipeline and provide companies, and communities, significant benefits.

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At an even higher level, corporate leaders should weigh in regularly on matters such as the nature of the “social contract” and the need to overhaul markets for labor and services. They should think deeply about what it would take to renegotiate the bargain between labor and capital, in forward-looking terms and with differentiated approaches to suit the realities and politics of the different regions in which they operate.

http://dupress.com/articles/put-us-to-work-responding-to-the-new-jobs-creation-imperative/?icid=hp:ft:01

[I AM NOT THAT GUY 5,715]

There needs to be some rethinking about what constitutes a living wage, and how big a labor force we really need. There was a time, not that long ago, where one wage earner was expected to support a family of 5-7. These days, with families half that size, it often takes two wage earners. I am of the notion that not everybody needs to work, but it is not up to government to redistribute the wages of those that earn them, the wage earner himself (herself) should be able to do that without help, thank you.

However, I do believe government does have a role in setting a minimum wage, but at the same time, it should expect a reduction in the workforce as industry expects more efficiency and productivity with the higher wage, and consumers should expect higher prices. I suspect high tariffs on imported good would be required, and a better source of revenue, than taxing incomes.

Edited January 8, 2014 by The Postmaster