Recently, the Gallup Organization assembled worldwide polling data that clearly showed that everywhere on the face of the planet, mankind’s biggest perceived need is a good job.1 By “a good job,” the respondents mean formal, steady work from an employer, of at least 30 hours per week, which pays a “decent wage.” To the respondents, having this good job was more important than having a family, their religion, or various ideals such as democracy, freedom, and peace.
Over the past 30 years, this shift in mankind’s number one desire from peace or security to wanting a job, tracks with globalization and the increased share of the world’s population that’s moving up from subsistence living. A growing awareness of better lifestyles is driving people to take the necessary steps to get there ? and the path to attaining that lifestyle is a decent job. Consequently, the demand for decent jobs is increasing.
Unfortunately for all these job seekers, there is a global jobs shortage.2 Of the 7 billion people on Earth in 2012, 5 billion are over the age of 15. Of those 5 billion, 3 billion say they want a full-time, formal job. The problem is there are only about 1.2 billion of those jobs in the world today. That means there is a potentially devastating shortfall of nearly 1.8 billion jobs. Even if we assume 10 percent of these people want only part-time work, the real global unemployment rate is a whopping 50 percent!
This has ramifications for citizens’ relationships with their cities, countries, and in fact, the whole world. Even now, enormous societal tension is building up among the roughly 25 percent of the world’s people who are underemployed. Much of radical Islamism is a by-product of 70 percent underemployment in places like Yemen.
Solving the jobs problem will impact many areas of life, and world leaders will need to consider every move they make, from waging war to building societies, in this new context of populations wanting a “good job.”3
Consequently, stimulating job growth has become the new priority for all leaders, because failure to do so will lead to instability. In his book The Coming Jobs War,4 Gallup Chairman Jim Clifton underscores this point when he states, “If countries fail at creating jobs, their societies will fall apart. Countries, and more specifically cities, will experience suffering, instability, chaos, and eventually revolution. This is the new world that leaders will confront.”
Viewing world events through this prism, it’s easy to understand the current state of widespread unrest, from the Arab Spring to the Occupy Movement. Clifton reminds us that nearly a quarter of the world’s population is currently experiencing or has the potential to experience job-related societal stress and instability.
§§§§§§§§§§
This war will be fought across the four distinct dimensions of economic value creation: 1. Human capital 2. Economic models 3. Geopolitical constraints 4. State-based enablers and impediments
Human capital is defined by the quantity, age, gender, education, experience, and attitudes of those who make up the workforce. Economic models include the business models available to competitors as well as the institutions that can support those models, such as research universities, not-for-profit organizations, venture capital networks, banks, trade associations, and so on. Geopolitical constraints include geography, international relations, natural resources, and other factors inherent to operating from a specific country. State-based enablers and impediments include subsidies, trade barriers, taxes, and regulations. Formal industrial policy is typically an enabler, while regulations are typically impediments.
§§§§§§§§§§
Fighting the jobs war will come front-and-center because most of today’s global stress and instability would melt away with the immediate availability of 1.8 billion jobs. But, actually addressing the critical need for jobs demands leadership in significant ways that has largely been missing in much of the world.5
For the leaders of countries and cities, every decision made has to be weighed with an eye toward its impact on encouraging or discouraging the creation of good jobs. Taking this issue lightly will put cities and countries at risk. No country understands this better than China.
Educators will have to look beyond today’s curricula and graduation rates, and re-engineer their institutions to ensure that students aren’t just getting an enjoyable experience and a diploma. Every education must prepare the student to hold a good job. For institutions that have existed to employ teachers and build their own infrastructures, this will be a wrenching change. In the developed world, creative destruction in the education sector will resemble a tornado.
When considering new laws and regulations, lawmakers will emphasize their impact on encouraging or discouraging job creation. If enough jobs aren’t created in a particular geographic area, that city or country will lose the economic battle; look no further than Detroit. In the United States, Wisconsin and Indiana are following the lead of Texas in abolishing job-killing regulations. This will spread to other states like New York, New Jersey, and California, as well as across the globe.
Military leaders will increasingly focus their priorities on job creation. Specifically, countries will use military and diplomatic pressure to open markets. Military strikes, occupations, or community policing will all be done with one eye on maximizing job-creating trade. Additionally, defense research will continue to pump technologies into the private sector, where they can be put to work for maximum impact.
So, how and where will these jobs be created? The answer is complicated by the fact that job creation really depends on customer creation. Businesses know that the lifeblood of a company is paying customers. The jobs then follow.
A reason “central planning” so often fails is that political leaders don’t grasp this concept and, therefore, their focus is misplaced.6 This has actually prolonged America’s underemployment crisis. “Pretend jobs” made by government bureaucrats, rather than authentic “real jobs,” have come and gone as a result of this lack of focus on customers by political leaders.
It comes back to bureaucrats thinking that government can solve all problems. It can’t. At best, it can create the environment where the true forces for solutions can be unleashed. This is exactly what is not happening today.
So far, government has focused its resources on those who “need help,” rather than on those who are in a position to “offer help.” Specifically, small and medium sized businesses have always been the primary job creators and employers. They fully understand what it means to create customers who generate the revenue that enables the hiring of employees.
Unfortunately, as the Gallup research confirms, there’s also been a misplaced focus on “innovation for its own sake” rather than on entrepreneurship. As chronicled in Trends and Business Briefings, there is an enormous backlog of great technology ideas and basic research on which billions of dollars has been spent. These ideas and discoveries are monumentally important, but what’s still missing in the United States and most other countries are the great businesspeople and entrepreneurs who are willing to take a chance on breathing life into them.
§§§§§§§§§§
Who are they? Gallup highlights four key categories of people who are necessary to drive significant job creation in any economy, and success depends on enabling these people.7 These four categories are:
1. Innovators. Innovators envision the ideas that create new products, new markets, stock value, and thousands of jobs. Their discoveries create big surges of increased economic activity, which leads to job creation. They solve the difficult problems, but quite often aren’t the ones who bring their innovations to market. Most often, that takes the next category of successful people. 2. Entrepreneurs. These are the rainmakers who see the potential in new ideas and take the risks necessary to make them a reality. Typically, they put their money and careers behind them. They possess the rare gifts of optimism and determination, which are two of the most valuable resources in the world, since they are even rarer than creativity and innovation. 3. The so-called Superstars. These people are extremely rare creative achievers in the arts, entertainment, or sports. They are significant because they can become economic engines in the places where they live and work. Their movies, books, concerts, and sports championships create huge new amounts of economic energy. 4. Super Mentors. According to Gallup, they are individuals who care greatly about their local communities and encourage the Innovators, Entrepreneurs, and Superstars. These are often college presidents, the heads of philanthropies, religious leaders, or CEOs. They play the pivotal role of identifying and developing young stars, and then guiding and leading them, even going so far as to help line up financing for them.
§§§§§§§§§§
As we’ll explain later in this issue, information technology, production, urbanization, the human food chain, and education all represent crucial leverage points that will define the winners and losers of the coming jobs war.
Before we examine these specific domains, consider the following general forecasts:
First, any city, state, or country that succeeds in creating net-sustainable jobs in the 21st century will become a good place for entrepreneurs.
Where laws, taxes and regulations discourage people from starting businesses, a city or country will experience a brain drain: the fleeing of talented people to greener pastures. In the global war for jobs, the successful countries, states, and cities will invest in entrepreneurial people, with great ideas playing a supporting role. As we’re already seeing, the brightest people with a burning desire to succeed will move toward the locales where the environment encourages, supports, mentors, and celebrates entrepreneurship.
Second, with rare exceptions, the jobs that have left the U.S. and EU will not be coming back.
Strategies based on “bringing back manufacturing,” for example, are not the answer. The solution for the U.S. and EU is the same as for every other place in the world: Create the next generation of customers that drive new human development. This is the story of the Internet, the automobile, the airplane, the transistor, the satellites, and the social network. We now need to invent the next way for humans to survive and thrive, rather than expecting a permanent monopoly.
Third, despite all the alarmist rhetoric, China will not pull ahead of the U.S. in GDP.
Thirty years ago, the experts were predicting that Japan and Germany would pass the U.S. in terms of GDP, since their economies were booming while ours was stagnant. What the experts missed was the strong entrepreneurial base and climate in the U.S. that led to the explosion of the Internet and related fields, driving GDP up to $15 trillion. Many are surprised to learn that China’s GDP is now only $6 trillion; they assume it must have already passed the U.S. When today’s experts predict that China will surpass the U.S., they base it on current growth, which is, admittedly higher in China. Given today’s relative growth trajectories, China’s GDP would outpace the U.S. sometime between 2030 and 2040. But it will all come down to which country wins the war for job creation. The odds are that America will be the winner because of our solid heritage of entrepreneurship and our unparalleled ability to attract talent from all parts of the world.
References1. To access information regarding Gallups World Poll, visit their website at: http://www.gallup.com 2. Forbes, October 26, 2011, "Gallups Jim Clifton on The Coming Jobs War," by Dan Schawbel. ⓒ Copyright 2011 by Forbes, Inc. All rights reserved.http://www.forbes.com 3. Gallup Management Journal, October 11, 2007, "Global Migration Patterns and Job Creation," by Jim Clifton. ⓒ Copyright 2007 by Gallup, Inc. All rights reserved.http://gmj.gallup.com 4. The Coming Jobs War by Jim Clifton is published by Gallup Press. ⓒ Copyright 2011 by Gallup, Inc. All rights reserved. 5. Forbes, October 26, 2011, "Gallups Jim Clifton on The Coming Jobs War," by Dan Schawbel. ⓒ Copyright 2011 by Forbes, Inc. All rights reserved.http://www.forbes.com 6. Gallup Management Journal, October 11, 2007, "Global Migration Patterns and Job Creation," by Jim Clifton. ⓒ Copyright 2007 by Gallup, Inc. All rights reserved.http://gmj.gallup.com 7. Gallup Management Journal, February 14, 2012, "The All-Out War for Good Jobs." ⓒ Copyright 2012 by Gallup, Inc. All rights reserved.http://gmj.gallup.com
