The other day, I heard Biden proclaim that 6 million new jobs had been created during his time as president.  Is this something that he should take credit for?  Perhaps more important, does it even really matter?

It is common for a president to say that he has created X number of new jobs.  To give a tiny bit of credit to Biden – or more likely his speechwriters – he said “the economy has created 6 million jobs”.

It would have been better to say that businesses and entrepreneurs created new jobs, but at least he didn’t claim direct credit for creating the new jobs.  When the federal government spends trillions of dollars per year, it is pretty easy to create some new jobs (while destroying others).

In my book Free Market Economics Made Easy, Chapter 4 is titled “Let’s Not Create Any Unnecessary New Jobs”.  I point out that the reason we have jobs is because we live in a world of limited resources.  People need to work in order to produce things to consume.

While people need an income in order to buys things and survive (and prosper), the jobs themselves aren’t what gives us prosperity.  It is the production of goods and services that we are able to consume.

There is always work to be done in this world.  If there weren’t work to do, then we would live in a world of unlimited resources, and we would already be wealthy beyond imagination.  But this isn’t reality.  People have to work in order for us to have goods and services to consume.

The goal isn’t to create more jobs.  The goal is to create more goods and services.  The number of new jobs is meaningless.  In a free market, there is always work available to almost anybody who wants to work.  The question just becomes – at what price (wage)?

2021 Exposes the Fallacy

This economic fallacy of job creation has been exposed in 2021 for anyone who gives it a little thought.

Just from personal experience, I see many businesses desperate to hire people.  I have actually seen limited services due to a worker shortage.  There have been some retail stores and restaurants that have had to close down or reduce their open hours due to a lack of staffing.

Of course, these places could hire someone quickly at the right wage.  But a small business or fast food place wouldn’t be able to make a profit if they have to hire a relatively low-skilled worker at, say, $30 per hour.

I have seen McDonald’s advertising to pay as much as $15 per hour in a place that wouldn’t be considered a really high cost-of-living area.  So their value menu isn’t going to be as much of a value as it once was.

The problem in our economy isn’t a lack of jobs.  The problem is a lack of production.  This has hit home in 2020 and 2021.  It doesn’t matter how many jobs there are if there is no toilet paper on the shelves.  It really doesn’t matter how many jobs there are if food isn’t being delivered to the grocery stores.

Employment itself is not what makes us wealthy.  It is the efficient production of goods and services, along with the advancement of technology.  But even with advanced technology, you need production to put it to use.

At the end of Chapter 4 in my book, I write:

“In conclusion, it shouldn’t be a goal to create unnecessary jobs.  It should be a goal to create wealth.  By creating wealth, we are further satisfying our desires.  This increases our standard of living and makes our lives easier and more enjoyable.  Instead of hunting for your food tonight, you can stay at home in air conditioning while surfing the Internet and listening to your favorite music.”

There are many lessons to be learned from 2020 and 2021.  The idea of job creation as a goal has been proven wrong.  It has been made obvious that the key to economic prosperity is production.  In order to consume stuff, the stuff has to be produced first.