Bill Meagher surveys a field of influential business, community and political leaders and finds a multitude of answers to one simple question.
The much ballyhooed high-speed rail line that’s to run from San Francisco to Anaheim is said (these days) to carry a price tag of $100 billion. But supporters point to as many as 1 million new jobs that will be created as a result of the bullet train.
Trouble is, the San Jose Mercury News did a little digging and says the real jobs number is someplace between 20,000 and 60,000 per year and, once the line is built, the full employment would look more like a few thousand people.
This is the nature of job creation. To say it’s an inexact science, practiced by people with a thirst for their own point of view, is like saying that President Obama is only a wee bit tired of Congress.
But it goes beyond the shading or, in some cases, the mauling of the truth. I’ve covered politics from town councils to congressional races to the Senate. I’m used to elected officials presenting their particular spin in ways that would make a DJ envious.
Job creation seems to be a mystical mix of economics, the interplay of markets and the reality of the relationships between industry, commerce and consumerism, all shrouded in a dense tule fog. That’s a tall order for most of us to understand, not just those who live in places like Sacramento and Washington, D.C., where the keeping of one’s office seems to take precedent over the doing of one’s job.
I spent a few weeks in December finding out just how job creation works. I asked a wide variety of smart folks in the North Bay to answer a single question in the hopes that I might write a true story about what job creation really is, or perhaps is not. I inquired of corporate officers and academics, entrepreneurs and local business types, economists and politicians, and asked them all the same thing: “If you were going to create jobs, what would you do?”
Their answers may surprise you.
Emerging markets
I started out in the tree-lined southeast San Rafael neighborhood called Dominican, which is home to the university of the same name. The school that was founded by an order of nuns better than 120 years ago has enjoyed a renaissance of sorts during the past few years. Admissions are up; it enjoys a fine reputation for its green MBA program; and it even hosted a debate in October 2010 where candidates for California’s governorship told a packed house what they believed the voters might wish to hear.
This is where you’ll find Dr. Denise Lucy, who heads up the Institute for Leadership Studies in the university’s School of Business and Leadership. Lucy is a business professor with a firm belief that businesses in the United States could grow and add jobs if they learned to export products to countries outside the boundaries of NAFTA. “The trouble is, 90 percent of businesses that are exporting are focused on NAFTA countries, but we, as a country, need to focus on selling to emerging markets,” Lucy says.
She points to the so-called BRIC countries as examples of the kinds of growth-oriented markets that would help add jobs back home. BRIC stands for Brazil, Russia, India and China, and this quartet of countries has long caused yield-hungry investors to salivate at the returns that might be possible as their economies begin to move in a direction where consumerism might play a larger role.
Lucy doesn’t come to her opinion based solely on her view from an office with ivy growing outside the window. Her office collaborates with the Northern California branch of the U.S. Commercial Service, a division of the U.S. Department of Commerce, which is housed at Dominican’s School of Business and Leadership. The commercial service is an outpost dedicated to helping businesses that wish to export their products.
She says tapping the export market in a more substantial manner has “enormous potential, but there are impediments. New studies tell us this can be the next industrial revolution. This is about ‘Globality’—competing with everyone from everywhere for everything.”
Education and confidence
My next stop was Autodesk, the engineering software giant that seems to add a new company to its holdings every other week. With offices all over the world, Autodesk has long ago grown beyond its North Bay roots. But I caught up with CFO Mark Hawkins, who oversees both Autodesk’s global finance needs as well as its procurement organizations. Prior to joining the software company in 2009, he had stints at Logitech, Dell and Hewlett Packard.
Hawkins was joined by phone on a conference call with Autodesk senior director of public relations Greg Eden. After some holiday pleasantries, Hawkins warmed to the question by incorporating Autodesk’s customer-centric philosophy. “The number one issue is growth that will create jobs, but to grow you have to focus on solving customer problems or anticipating problems. Creating good products that customers need—that’s really at the center of it.”
Hawkins also took a bigger picture look at how jobs are created on a larger scale: “Are we educating well enough when it comes to technology? Does the education allow for worldwide competition?”
Like a lot of corporate execs these days, Hawkins also commented that, while adding quality employees helps companies compete in a global economy, for companies to feel comfortable expanding, the economic environment must be conducive for growth.
Infrastructure
In Novato’s Bel Marin Keys, you’ll find blocks of office buildings showing the symptoms of a lagging economy. Space available signs seem planted in front of almost every structure. Tucked back off the main drags is a two-story mix of gray concrete and tinted windows that’s home to CSW/Stuber-Stroeh Engineering, a 40-employee firm that soaks up local engineering contracts the way Autodesk collects new companies. The company is led by Dietrich Stroeh, a Novato resident who sits on the board of directors of both Bank of Marin and the Golden Gate Bridge District.
Stroeh is a mix of old school tenacity and updated political smarts. He’s crusty, up-front and doesn’t suffer fools elegantly. When he considers the question, he shoots from the hip. “To begin with, there’s no secret, no magic bullet,” he says. “It’s a very mixed bag. You can’t do it like the government—thinking you can create jobs by simply spending money. Unless it’s tied to infrastructure projects that need to be done, which does create jobs.”
Stroeh points to the Great Depression and the success of the Works Progress Administration (WPA) in putting people back to work by improving the infrastructure all across America. “To me, once you’re paying people, they’re going to spend money. And that, in turn, is going to create more jobs.”
He mentions the Sonoma Marin Area Rail Transit (SMART) project as an example of the kind of project that can help grow jobs. “I don’t know how many new jobs it might create, but I do know that the companies doing work on it will need to add some people—and those people will be spending their paychecks. That certainly helps the local economy, which will add some jobs.”
(In the interest of full disclosure, CSW Stuber-Stroeh may wind up being a contractor on the SMART project. And I’ve collaborated with Stroeh on a book project. On the other hand, if he were full of crap, I’d share that with you, too.)
It’s a list
From Novato, it was time to jump Highway 37, bound for Highway 80 and Sacramento, to sound out Assemblyman Jared Huffman (D, San Rafael) on how best to add jobs. Huffman represents southern Sonoma and all of Marin counties, at least before the latest edition of redistricting takes place.
These days, booking time with politicians isn’t easy, as the give-and-take between those who hold office and those who communicate with the public has become somewhat strained. Having run the gauntlet with a pair of Huffman staffers who knew I desired to pull the politics out of the job creation equation, it was uncertain if Huffman would make the time to talk. But he actually called back so quickly I had to reschedule for the next day. A native of Independence, Mo., Huffman is a fan of Harry S. Truman, whom he saw walking the town square as a boy.
When I do connect with Huffman, he’s done his homework: “I don’t think it’s one thing we need to do to create jobs,” he begins. “It’s a list of things.”
Huffman wants to see local jurisdictions accelerate the pre-permitting process for companies that want to engage in clean manufacturing, making compliance less uncertain and shortening the approval process. “We also need to dramatically improve the access to capital for small business, including making micro-capital available through loan guarantees.”
In the past, community banks have handled some of the capital needs for small business, but Huffman is savvy enough to acknowledge that some local lenders have enough problems of their own—and he’s savvy enough not to mention it.
Huffman wants the feds and the state to start spending money on infrastructure for clean energy transmission, building, retrofits, transportation, transit and schools. “These are projects that need to be done that have been ignored or passed over.”
And like Autodesk’s Hawkins, Huffman acknowledges the importance of improving education with an emphasis on technology. “We need to ‘skill-up’ the future workforce. From kindergarten through 12th grade and beyond, we need to improve what students are learning,” he says.
Huffman even weighs in on immigration, sort of. “People come from overseas to become educated here, and then they go home. We need to make it easier for them to come here, get an education and then stay here.”
Then he walks right up to the elephant in the room—the deficit. “We need sensible deficit reduction on both state and federal levels, not arbitrary slash-and-burn, which could push us into a double dip recession,” Huffman says. “If we’re going to add jobs that last, the economy has to be healthier.”
Education and business
Cotati was the next stop on the job creation tour to chat with Dr. Robert Eyler, the interim CEO of the Marin Economic Forum and a professor of economics at Sonoma State University who’s been named Frank Howard Allen research fellow. Down to earth and pragmatic, Eyler tends to look local first before focusing outward. “What can we do to grow in Marin?” he begins. “We need to first think about business retention before expansion. Retention means focusing on smaller firms that want to stay in Marin—convince them that they should stay and then help them expand.”
He, too, hits on education. “What do businesses need? We need to match education with labor demand based on how our regional economy will attract and retain businesses. We need to involve businesses in education beyond financial philanthropy.”
Eyler says public schools lag behind what’s needed on the labor side by at least two years, and that it shouldn’t be up to just schools and government to figure out how education and businesses can be more closely linked: “Schools, governments and businesses have to do a better job of understanding the educational relationship to the workforce and improving on it,” he insists.
Fix the economy
Beacon Economics used to hang its hat in Marin but now calls Los Angeles home. So I needed a long distance hookup to sample the job creation wisdom of Christopher Thornberg, a founding partner at Beacon.
Thornberg is also a chief economic adviser to California State Controller John Chiang and can be found in the role of talking economic head on CNN, FOX and PBS (to pick on a few letters of the alphabet). While very bright, he doesn’t hit you with lots of Keynsian theory or quote the Chicago school of economics. Instead, he takes the premise of the story and flips it on its head.
“You have the question backward,” he begins. “You don’t create jobs, you fix the economy. A healthy economy will provide all the jobs that are needed.”
He pauses for a moment then says with a laugh, “You do realize things are getting better, right?”
He’s talking of the unemployment numbers released by the feds a few days earlier that show a national unemployment rate of 8.6 percent for November, an improvement over October’s 9 percent. But then he adds that he expects things to be tough for another 18 months and admits the fact that California has the ninth largest economy and is still toting double-digit unemployment numbers makes the job creation question relevant.
“Jobs are coming back. Your question is going to become passé in the next 12 to 18 months, barring a meltdown in Europe,” he says. “But the question is, what do we do about the economy? And what are the weaknesses in the economy?”
Thornberg, like Stroeh, favors increased support for infrastructure projects. “I was disappointed with the small amount of infrastructure that the feds went after with stimulus funds. It was really the perfect way to add jobs at a time when that was the kind of action that the economy needed.”
He also tees off on the notion that tax cuts are the magic key to creating jobs: “Take a look at corporate profits; they’re at or near record levels. The idea that we need to cut tax rates to create jobs doesn’t work,” he says. “Companies are taxed on net profits, but they hire before they get to that level. When people talk about cutting corporate taxes, that could have some affect for companies, but you’d also need to cut out some of the tax benefits they’re getting now to balance it out.”
Stay positive
Last, I tracked down Joel Gott, an entrepreneur of the first stripe. He counts Joel Gott Wines, Gott’s Roadside eateries (three locations) and Three Thieves Wines among his ongoing business endeavors. I find him by cell, on the road as he often is. “I’m stuck in traffic on Route 29. Just livin’ the dream,” he offers.
“For me, the idea of adding jobs is pretty simple. If I’m a restaurant, then it’s either finding a new location where the landlord wants to work with me or adding a meal service and putting more people on staff to make that work.”
For a wine brand, he says he needs to consider adding jobs through enlarging the sales staff and considering transportation needs. "In the end, people need to have the confidence that the business is there and adding more people is the right thing to do,” he says.
So to answer the posed question, it would seem that consumer and business confidence has something to do with it. Greater exporting and supporting infrastructure certainly seems to have something to do with adding jobs, and education seems to be a primary consideration as well.
But the widely held political rap of cutting taxes is a panacea, at least according to a guy who earns a pretty fair living studying and advising on economics.
To be fair, I don’t honestly think anybody has all the answers, which is one of the reasons I kept asking people the same question. That means the next time you hear somebody running for office, or somebody trying to hang on to an office, talk about how he or she has all the answers when it comes to creating jobs—and it’s fairly simple—you might want to reach for a salt shaker and consider the source.
