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Thu Jan 19, 2012, 06:47 PM

Romney says he created 100,000 jobs. But that is the Gross number. What you need is the NET number.

A current topic of discussion is how many jobs did Mitt Romney, through Bain Capital, actually create. Romney has cited Sports Authority and Staples as shining examples of job creation. (How Many Jobs did Romney Create at Bain ).

But just looking at the number of jobs created (in various cited companies) does not get you the right number. The only meaningful number is the NET Jobs Created. Now, if Staples or Sports Authority added x number of jobs their success and growth came at the expense of their competitors. While they added jobs, their competitors lost jobs (all of them if they went out of business).

If the Sports Authority and Staples were so successful it's because they beat out their competition. And this most likely means they were offering products of comparable quality at a better price (there is not that much of a service component to sporting goods retailing). If people were buying product at a lesser price from SA & Staples then that means they have some money left over to buy other things ... (more i-Pods, pizzas, or whatever). This increased purchasing power would then lead to additional sales and this could result in increased employment. But the additional employment would be based upon additional demand produced from the money consumers saved buying items at the SA & Staples.

So, if SA and Staples saved buyers, let's say 10% on their purchases, then you could make an estimate of the increased employment (this would require more data to make real estimate - but for purposes of making a point I will use a very rough guesstimate) based upon the amount of money saved by the SA & Stapes customers (and therefor available to make other purchases). {This of course, is complicated by which sector the saved money was spent in (retail food, electronics, etc).} I will use a great simplification of assuming similar levels of staffing relative to sales revenues for SA & Staples and for the companies that gained the sales from the savings enjoyed by SA & Staples customers.

Staples had about 89,000 employees at the end of 2011. Sports authority is now a private company but when they were incorporated the available information showed they employed about 11,000. So let's say 100,000 employees total for both SA & Staples. If these two companies were able to sell product for 10% less than competitors - let's make a guesstimate that the money saved provided additional sales which lead to the hiring of an additional 10,000 employees at various companies where the saved money was spent (this assumes a similar number of employees to retail sales revenues to that for SA & Staples - big assumption but this is just to make a point.).

So the NET increase in Employment was not 100,000 but a percentage of that number, something like 10,000 (assuming SA & Staples saved their customers 10% on their purchases).

But it's not that simple! If SA & Staples beat out competitors by underpricing them 10% - it's quite possible that that greater efficiency achieved by SA & Staples, would have been reflected in fewer employeers for dollars of sales for SA & Staples than for their competitors. That is, their competitors may have employed more people per dollar of sales than SA & Staples. So it's possible the jobs lost as competitors down-sized or were driven out of business was GREATER than the jobs GAINED at SA and Staples. If the competitors who lost out to SA & Staples were 10% LESS efficient than SA & Staples then the NET jobs gained could have been ZERO - because the competitors (if they were driven out of business) would have lost 10% more jobs than SA and Staples created. I am assuming of course, that the difference in total efficiency was also reflected, to the same degreee, in different staffing levels in the competitors and SA & Staples.

So what really produces increased jobs/employment? Well, it's increased total Demand for Goods and Services which leads to increased sales and the hiring of more people. Efficiency improvement CAN lead to jobs gained but it's not as simple as just counting the additional jobs gained at the winning employer. You have to look at the nubmer of jobs lost at the competitor employers. And taking into consideration the competitors who lost out to the more efficient winning employers, the number of jobs lost at the losing companies would reduce the number of jobs gained at the winning employers, perhaps for a NET jobs gained of ZERO.

If you want to create jobs growth, increase demand for goods and services. And the best way to do that is to see that the largest part of the population isn't losing ground in terms of earnings. During the Bush administration median income in the U.S. went down about 4%. This does not (and did not) bode well for aggregate demand for goods and services and thereby jobs growth. during the Bush regime, the net job growth was zero. (Aughts were a lost decade for U.S. Economy, Workers

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Reply Romney says he created 100,000 jobs. But that is the Gross number. What you need is the NET number. (Original post)
Bill USA Jan 2012 OP
valerief Jan 2012 #1
julian09 Jan 2012 #2
JohnWxy Jan 2012 #3
cbrer Jan 2012 #4
Bill USA Jan 2012 #5
Dan Feb 2012 #6

Response to Bill USA (Original post)

Thu Jan 19, 2012, 06:47 PM

1. And the country. You need the country. nt

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Response to Bill USA (Original post)

Thu Jan 19, 2012, 06:54 PM

2. How many of those jobs were created after he left?

 

What they have now is not what they were when he left. How many mom and pop stores did they put out of business, then raise prices.

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Response to Bill USA (Original post)

Fri Jan 20, 2012, 03:49 PM

3. Excellent analysis and debunking of all the ludicrous, stupid debate about Romney's jobs numbers.

YOu're absolutely right. It's NOT the Gross jobs created at the specific companies he invested in that should be examined. What's meaningful as far as the economy goes is the NET Jobs created. It's fine if he invested in companies that had better more efficient ways of doing something but the net jobs created in the economy is the only meaningful number here.


....RECOMMENDED.... (if only the M$M talking heads would read this then they would learn something! ...of course, maybe they don't want to)

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Response to Bill USA (Original post)

Fri Jan 20, 2012, 04:54 PM

4. So by determining

 

The net number of jobs he had a hand in creating, or losing, we'll have a better picture of how qualified he is/isn't to lead America right?

You people better wake up. Not only is he ill qualified to run this nation, all the candidates of the RNC are facades for the institutions that are REALLY running this place.

As well as the Nobel peace prize winner we have in office right now. We are shuffling deck chairs on the Titanic. The people who are supposed to be running America, abdicated long ago.

While the Dept. of Education killed our public education system, Nintendo and Haggen Daz drew our attention away.

Founding Fathers? There are enough spinning graves out there now to alter the earth's rotation.

Revolution!

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Response to cbrer (Reply #4)

Tue Jan 31, 2012, 09:33 PM

5. thanks for that tip.


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Response to Bill USA (Original post)

Wed Feb 1, 2012, 12:34 AM

6. and the quality of the NET jobs...

So, wonder what was the following:

(a) Average Mean pay
(b) Median pay
(c) Average pay
(d) Payroll package

And what would those figures be for the following:
benefits per position (gained versus loss);
Salary/pay per hour (gained versus loss);
Pension per position (gained versus loss);

One day - somewhat will figure out these quality of life issues, and then the fun will begin...

If one could also factor in the societal cost that are indirectly related to job loss/gain:
(a) divorce rates - prior to the introduction of Bain and after for a defined period;
(b) crime statistics - same as above;
(c) school drop out rates....
(d) increased cost in social welfare programs that provided assistance...

Smiling...

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