- The job market today is in turmoil and government aid only works in the short term.
- Virtually all net new jobs – where real growth lives – come from new businesses created by entrepreneurs.
- Jobs will come back as long as our free enterprise system allows entrepreneurs to build new businesses.
- Joe Ricketts is an entrepreneur, philanthropist, and founder of TD Ameritrade.
- This is an opinion column. The thoughts expressed are those of the author.
- Visit the Business section of Insider for more stories.
America’s job market is in turmoil. The COVID economy is unlike anything we expected at the start of 2020. By this past summer, 10 million American workers were giving up on returning to their last employer. These losses were four times more likely to hit hourly workers than those who received a salary, and many hourly workers who did return to their old job saw their hours reduced.
These issues are incredibly stressful for hard-working people looking to provide for themselves and their families. But while people are understandably worried about putting food on the table and keeping a roof over their heads, left-leaning politicians and pundits are making a case for additional expansion of the social welfare net. Yet as much as we need short-term government aid to get through this crisis – and we do need it – government aid can only be good for the country in the short term.
When the government spends money to support the unemployed, it’s a Band-Aid, not a sustainable solution. With jobs scarce and millions looking to the government for help, we tend to overvalue what government can do. Socialism starts to sound appealing, but as Margaret Thatcher once said, the “trouble with socialism is that eventually you run out of other people’s money.”
The only power the government has right now is to buy the American worker some time. So, where can we turn for sustainable opportunity and meaningful hope? Where will the new jobs come from?
Virtually all net new jobs – where real growth lives – come from new businesses, not from existing businesses that, in general, only create enough jobs to offset the ones that established companies are losing, and not from the government. In my opinion, economic recovery will come when the millions who have lost their jobs find new ones at thousands of new companies that will be hiring.
Who will create those new businesses? Entrepreneurs. Those stubborn risk-takers who make use of the free market to offer a new product, deliver something familiar in a new way or make it available where it wasn’t before. Those are the people who will be hiring, and the wages they pay and the materials they buy will help the economy heal itself, lifting us all.
This should not be news. Entrepreneurship is the engine of growth everywhere. This is the magic of the free market. Free enterprise works for all of us – a rising tide lifts all boats. But entrepreneurs as a group have not communicated this crucial idea well enough.
Entrepreneurs can do more to help
One thing I learned as an entrepreneur is that marketing is essential. You may have a great idea – like offering $8 stock trades to investors when they always expected to pay much more – but if you don’t get the word out about your innovative approach, your customers will never find you.
Entrepreneurs have not done a good job of getting the word out about the essential role new businesses and free enterprise play in reviving a down economy. Because many people are uninformed on this point, when they see a new business open in hard times, they may think that the founder is crazy. If that business does well, and the entrepreneur prospers, people may even feel like that prosperity is inequitable or unfair. But every new business that thrives will benefit its community.
We ought to feel good when we see new businesses opening and entrepreneurs succeeding. We should support new ventures and consider whether we could be part of one, too. If you’re out of work yourself, your new job will probably come thanks to an entrepreneur. If you’re a waiter whose restaurant has closed or a performer who’s lost their venue, look to the entrepreneur who can reimagine a restaurant that works in a COVID world or a performance space viable in these changing times.
And to those potential entrepreneurs who hesitate to start a company in a slow and unpredictable economy, who say, “This is not the time,” I say, look out! You’re missing the boat! Entrepreneurs find opportunities by taking advantage of change, including the changes we don’t like – economic decline, a pandemic, political uncertainty.
During the 1970s, while the economy struggled, the stock market dived, and our politics was a mess, I built Ameritrade because I saw the chance to take advantage of stock trading deregulation to offer people a better deal. My new business grew to employ 10,000 people. That same decade saw the rise of Apple, FedEx, Microsoft, and Oracle.
New business, new opportunities
Look back to the Great Recession of 2008 to 2010. The world seemed to be ending, but some entrepreneurs risked starting something new, and their employees had the courage to take jobs at companies their families had never heard of. Some of those companies were Uber, WhatsApp, Venmo, and Instagram.
I realize that starting a new business is intimidating. It’s scarier than jumping off a cliff. So rather than looking to the federal government for more handouts, we could ask the federal government not to tax new companies in their first five years. The practical loss of revenue would be small because most startups reinvest their earnings back in the business, so they don’t make a profit the government can tax. But the announcement of this pro-startup tax policy would help create a national focus on starting new businesses now when we need them.
I know times are hard. I also know that Americans will respond with creativity and grit, as we always do. There is even a name for it – “survival entrepreneurship,” as noted by Rich Karlgaard on Forbes earlier this year. Economists tell us that the businesses founded by those who must succeed to survive, such as businesses founded by immigrants, often have a better chance of success. They have to be.
Jobs will come back as long as our free enterprise system allows entrepreneurs to build new businesses. We can survive and, in time, prosper again. Look to the entrepreneurs – or become one yourself.