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The Bad News of January’s Unemployment Report

The bad news keeps coming. The Department of Labor just reported that nearly 600,000 jobs were lost in January. Unemployment rose from 7.2% to 7.6%. Big deal? Absolutely. Think about this for a second. About eight people in every 100 US citizens are out of a job. Or to put it a different way, 11.6 MILLION Americans are unemployed. Of course, things could always be worse and history has actually seen much worse. But history should serve as a preventative medicine for our present ailment.

I am still convinced that entrepreneurship and innovation are the key to our country’s ability to crawl out of its economic sludge hole. They drive the capitalism we need to get back on track. Unfortunately, too much emphasis is placed on government’s role in that process. Turn on the news. You’ll hear about Obama and his stimulus package. You’ll see Senators and Representatives debating about its effectiveness. And you’ll certainly get an ear full from pundits and spin doctors about who’s right and who’s up in the night. But little attention is being paid to (small) businesses and their capacity to help improve the country’s situation. After all, government is not the only system that is responsible for fixing the economy; there is plenty of blame to go around.


6 Responses

  1. You know what? Entrepreneurship would help. Do you know which country has been judged to have the best climate for business in the world (and we’re not talking weather)? It’s Denmark. Why? Just think what keeps Americans from starting businesses. In Denmark, all the basics are taken care of, whatever happens. You won’t go without a roof, or food, or healthcare, your kids will still have full access to higher education. Why not take a risk? Start a business! Work for yourself! Innovate! Think about it.

  2. I’m not sure who has judged Denmark as having the best business climate. True, everything is taken care of in terms of education, healthcare, etc. But it comes at a steep price in the form of extremely high taxes, which especially costly if your successful.

    While I’m sure an employer’s good dental plan may keep some traditional employees from launching a business, I doubt such issues will hold a hard nosed entrepreneur back. Legal and regulatory issues, as well as tax policy, are much more likely to inhibit entrepreneurial activities than whether or not one has insurance.

    Having lived in Scandanavia (Norway, not Denmark), I wouldn’t describe the people as entrepreneurial, or risk takers. Usually they were very risk averse. Danes I knew would also fit this description. And with a culture that emphasizes social equality, I’m a bit surprised that Denmark would be ranked so high as a potential place to start a business.

    But I certainly hope that it’s true.

  3. Thanks for stopping by. You’ve made an interesting point I’d like to discuss. I’d be interested to learn more about Denmark and it’s entrepreneurial climate. There is a lot that keeps Americans from starting business. I’d be interested to hear more of your thoughts about how entrepreneurs are unable to launch a company because health care, food and other basic needs are unavailable. Hope to hear from you soon.

  4. Thanks for your comment, Chris. Great points to consider. Having never been to Denmark, I’m not in a position to attest to it’s economic background first hand. But I think you make a good point in that nationalized benefits are probably not the primary driver of innovation or entrepreneurial activity. Just because you get health care for free does not necessarily mean you have more resources available for start ups. You’re right. That comes at a cost and usually in the form of taxes. It’s the law of displacement at work here. There is not such thing as a free lunch!

    I’m realizing how Obama’s stimulus proposal is disadvantageous for small businesses, especially. Taxes are going to increase, leaving less resources available to small business owners or entrepreneurs looking to launch a start up. I’d be interested to hear your thoughts on the matter.

  5. Forbes, yes American Forbes, is who declared Denmark to have the best climate for business.

    Starting a business in the US puts a person at risk regarding healthcare because he now has to enter the private market for his and his family’s healthcare. If any one of them has an existing condition, or develops a chronic one, that just plain won’t be possible. Not true in Denmark. If the business goes down, he can find himself without the basics of home (because he needed to use it for collateral to start or maintain the business) and food, and if he has a family he won’t risk that. Same goes for the college fund he has put away for his family. Both not true in Denmark. Home and higher education are considered human rights, since they know these things are basic to people being contributors and coming back from a fall.

  6. And The Economist as well.

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