Friday, April 4, 2014

Where Jobs REALLY Come From. It's Not Where You Think.



John Hope Bryant -Founder and CEO, Operation HOPE


I dig really deep into this in my new book, HOW THE POOR CAN SAVE CAPITALISM (June, 2014 release), but let me say it here quick, clean and crisp. On job creation, we're looking for love in mostly all the wrong places.
We talk about big business creating jobs, but this is not the 1970's, when 70% of all employment came from big business. 

We talk about innovation, but to quote my friend Jim Clifton, chairman and CEO of Gallup, "an innovation without a customer standing next to it is not a business."

We tell our kids to go to school K-12 and graduate (check), and then go to college and graduate (check). And then we tell all of our kids to go off and get a good job working for either big business or the government. 

Now, putting aside the six-figure-plus student loan balances that are slowly strangling a generation of achievers, 1,000 or so companies that employ 10,000 people or more in America cannot save America alone.
As admirable and inspiring as IBM, HP, UPS, the Coca-Cola Company, Wells Fargo, Google, Microsoft, Rubbermaid, Apple, SunTrust Banks and 970 other household name companies might be, this is simply not where we are going to find enough good jobs to employ a nation. 

Government is great, but the government in the U.S. economy accounts for only between 8%-13% of all jobs. The rest come from the private sector. And in the Middle East and Africa, the ratios are all backwards, meaning worse. In some countries 90% of all jobs are government, which is not sustainable I might add. And most of the rest of the jobs come from big businesses that are tied to the government. But none of these folks can solve the jobs crisis in those countries either. Everyone seems to be looking for love in all the wrong places. 

We seem to be talking about everything but the facts that matter most. So where do jobs (in a growing economy) really comes from? Let me take a run at it. 

There are more than 7 billion people in the world.
There are 300 million people in America.
America is the largest economy in the world, with approximately $17 trillion in GDP.
There are approximately 26 million business entities in America, but most of these companies and corporations are shell entities or tax structures.
Of the 26 million plus business entities, approximately 6 million employ one person or more.
Of the 6 million that employ one or more, less than 1,000 businesses employ 10,000 people or more. And most of these companies don't define economic growth as 'hiring more people.' This is not a knock on big business, it's increasingly a reality.
Approximately 18,000 businesses employ between 1,000 and 10,000 people.
70% of all jobs come from companies with 500 employees or less.
50% of all jobs in America come from companies with 100 employees or less. That's right -- HALF of all jobs in America. 

There you have it. 

Small businesses, entrepreneurs, start-ups and what is called "shoot ups" account for the majority of jobs in America, and most job growth comes from small businesses in years 3-7. 

I remember getting into a public debate with a big time Fortune 500 CEO. He was arguing how only big business was the driver of all relevant economic growth. I simply reminded him that every big business -- including his -- was once a small one. He stopped arguing. 

America started with the agrarian farmer during the Agricultural Age, and then came the Industrial Age, the Technology Age, and where we are today -- the Information Age. And my bet on the future -- is you and me. I believe the 21st century is going to see the dawning of the Human Age. Back to where we all began -- human capital as wealth creation. 

And that is why after 22 incredible years, I rebranded and relaunched Operation HOPE as a start-up: America's first nonprofit software company, specializing in the software of human potential. Reverse engineering poverty (into human potential). 

So when your kids ask you what they should be doing with their lives, don't just limit them to going and getting a job that already exists -- or alternatively doesn't exist. 

Challenge them to create a new job no one has ever seen or thought of before. Or maybe just a practical product or service that everybody needs, right in your neighborhood. Right around the block from your home or office. 

No one knew we needed the Internet until we got it -- and now most of us cannot live without it. You're reading this article because of the Internet. But in 1992, most of this eWorld we take for granted was a mere dream. And 90% of it was created by dreamers, entrepreneurs and small business owners. 

Average people like you and me created modern America. We can do it again. One new job at a time. 

Let's go.