Employment Number Goes Down by One

Bill Tatro
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Posted: Aug 06, 2011 12:01 AM

Is an increase in the number of jobs really all that great? 

Let’s go inside the numbers- personally with Walt. 

My friend Walt’s situation is a great example of why creating more jobs can be misleading. 

For many years, Walt, a construction owner, had a fantastic assistant who did everything from screening phone calls and booking client appointments to making sure he got to the doctor on time. 

However, as Walt’s construction business declined he was hard pressed to cut expenses.  His girl Friday had given many years of terrific service, and with steady increases each year, had achieved a $60,000 salary. 

Perfectly reasonable in normal times, however, these are not normal times (or maybe they are?) 

She also received job benefits, from pension and vacation to personal days and healthcare.  In fact, all those benefits added an extra $10,000 to Walt’s bottom line. 

Again, not historically difficult to overcome, but that was then and this is now. 

Unfortunately, Walt had to take drastic action, so grudgingly and reluctantly he downsized his longtime assistant, contributing to the unemployment number by one

He then advertised for a part-time assistant and much to his surprise, he was inundated with resumes.  Shocked to find Masters Degrees and PhD holders on the list for job interviews, he also told me the job candidates arrived with different attitudes. 

Some were  apprehensive, some showed fear, and many arrived with an air of desperation.  Well, Walt finally settled on two assistants to split the job.  Each would work twenty hours per week, with no lunch break. 

One would work mornings, the other would work afternoons. 

Because they were part-time employees, there were no job benefits which represented a savings to Walt of $10,000. 

In addition, each assistant would be paid $15 per hour, which represented a $30,000 total outlay per year for both part-time employees, another cost saving.  When Walt added it up, he had saved $30,000 in salary and $10,000 in benefits, for total of $40,000. 

 He was very sad for his former employee, but relished in the total dollar savings for his small business.  In addition, with the possibility of a future full-time job offer for a job well done, his two new employees worked very diligently.  (I might add that both were Masters Degree holders, one in Philosophy, and one in Psychology.) 

Walt told me that he was very proud that he contributed to the employment effort. Yet, he was also saddened that he removed one from the list, but according to the raw job numbers, he added two more jobs back into the economy. 

So, regarding the data as an increase of one job, don’t let it fool you.  The job statistics don’t always paint the real picture, especially when the news comes from the government.      


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