“Job creators” is GOP code for rich people, sometime specifically those making over $250,000. One generally finds the phrase used in something like the following: the last thing we need to be doing is raising taxes on job creators; or, we shouldn’t threaten job creators with new regulations.
The non-codified meaning of a “job creator” is any person that creates a job. Of course, jobs are not created by people they are created by demand. People certainly make decisions regarding who to hire and how much to pay them. But without a duty to perform, there is no job to be done. Owners and hiring managers can have as money available to them as they want; they will not hire unless there is unmet demand. The real creation, then, occurs when anything happens that creates the need for paid work. Restaurant patrons, book buyers, students, litigants, and patients are job creators.
To be sure, people making over $250,000 create jobs because they, too, usually have to pay for goods and services. But, then, so is everyone else a job creator. The person making $0 is a job creator when he turns up in an emergency room and gets treated (there’s the job) by a physician that is then paid with tax money (there’re some more jobs – tax collectors, fund administrators, and hospital administrators).
In any event, I searched the news for some quotes to back up the first paragraph’s claim. Turns out there’re quite a few folks out there irked with the “job creator” talking point. Some just want to point out that lower tax rates for top income-earners doesn’t create jobs. Fair enough on the economic point.
But, more to the accuracy of “job creators,” Robert Friedman wrote a column in The Hill touting the job creation of new businesses:
“Tax cuts for job creators!” It is a rallying cry echoing these days from both ends of Pennsylvania Avenue. For Republicans in Congress it means never raising taxes on the wealthiest 2 percent of the population. The White House, meanwhile, is considering a general reduction in payroll taxes for all.
Both scenarios, however, miss the real job creators: new businesses under one year old and typically unincorporated, which have added an average of 3 million net new jobs a year to the American economy. That’s more than all other categories of business combined, according to recent studies by the National Bureau of Economic Research and the Ewing Marion Kauffman Foundation.
And Mary Sanchez at the Kansas City Star argued that real job creators are those in the middle class:
This middle class is a vast middle tier of those who work to live, and strive to work a little harder to get a little more in life. Middle class people may save, but they don’t accumulate enough wealth to live off. Almost every buck they get, they spend.
That point matters: Spending creates jobs. In our economy, middle class consumers are the real job creators. Depress their income, and you depress employment.
We’ll never get around to holding politicians truly accountable unless this fuzzy middle demographic — a massive one as a potential voting bloc — gets wise about where it came from in the first place, and how it foundered.
The great prosperity of the American middle class in the late 20th century didn’t just magically transpire. The important groundwork was laid by the federal government via investment. Consider what the creation of the federal highway system did for developers and builders who created our suburban communities and all of the businesses that followed. Or the impact of the GI Bill on so many people who returned to the workforce after World War II.
…Much today is made of the massive federal deficit. I have a way we can solve that: more jobs. More jobs mean more growth, more tax revenue. But America’s job creators — middle class consumers — are tapped out. Business owners can’t hire until they have consumers to sell to. That leaves the job of stimulating demand to the government. Time for government to lay the groundwork for our future by investing in our middle class.
These arguments suffer from the same error in the GOP talking point–identifying one segment of the economy as the real job creators. Friedman’s new businesses are obviously the part of business that will create a bunch of jobs, being that they are new and in need of staff. And, just a guess here–new business start, fail, start up again, and fail more often than old business; so more new businesses exist each year creating jobs that may or may not last. But while businesses, whatever the newness, literally do the hiring, the jobs are not there without demand.
Ms. Sanchez gets to the point that demand within the economic system is the trigger to job creation. But it is a disservice to clarity to begin the analysis of how to stimulate jobs with a favored segment of society already in mind. The actions and decisions of rich people, middle income people, or low income people may have varying and more or less important roles in the sprouting up of a new job to be done; starting the discussion with one segment of income in mind, though, distorts one’s holistic economic thinking. Demand often stems from folks in the middle class buying things. But, as mentioned above, it also stems from rich and poor people getting sick, and the people at the end of the causal chain of demand might not do the paying.
