As the presidential campaign has revved up over the past year, the term “Job creator” has been widely used in reference to business operators who must hire employees if the U.S. economy is to experience an accelerated recovery, and sometimes in reference to the “One percent,” those who are in a position to invest a significant portion of their incomes. In fact, the phrase “Small business job creators” has become a marketing phrase that Republicans have used to cement the relationship between small business and job creation. However, the idea that there is a direct and certain relationship between small business and job creation has come into question, as has been cited in numerous articles this year, including USA Today (http://usat.ly/zmH5Dz) and The Wall Street Journal Online (http://on.wsj.com/yZh5Bn).
I have heard small business owners connected with the Tea Party movement refer to themselves as “job creators,” stating that they “would hire people” but they refuse to do so because regulations are too confusing and future costs of employees are not certain. In my experience, though, any business person who, when faced with demand for their product or service, would hire the correct number of people needed to meet the demand, whether the business be an advertising agency or a McDonald’s.
Investors are free to invest their money globally, and as responsible money managers, favor locations where the return on investment is greatest. So yes, it is true that these business owners and investors provide the jobs. However, it is also true that they do not hire people just because they happen to have money in their pockets, presumably from tax cuts provided by Republican policies. They hire people because they see increasing demand for their product or service. No demand, no hiring. Decreasing demand, layoffs.