The latest report from the U.S. Bureau of Labor Statistics shows that the U.S. economy added 256,000 new jobs in December, higher than expectations but fewer jobs in 2024 than in 2023. However, the number of people who have been unemployed for at least six months is 1.6 million, up by 278,000 from the same time the previous year. The economy gained 2.2 million jobs in 2024, less than the three million jobs added in 2023. The strength in jobs causes most experts to believe the Federal Reserve will pause rate cuts, especially since unemployment fell slightly to 4.1%. These data raise the issue of what causes unemployment or underemployment and what can be done to increase the number employed and individual prosperity.
Government does not create jobs; entrepreneurs do. Unfortunately, large firms often grow by merger and acquisition, usually with the result of cutting jobs. The real hope for increasing jobs and higher income lies with mid-level and new firms serving the needs of consumers with innovative or improved products and services.
“Who will give me a job?” How can I find a job paying higher income?” Those are questions unemployed or underemployed people have sometimes asked, questions motivating me to write two recent books. When the answer is “no one,” the best solution may be to create your own job. When I say, “give yourself a job by starting a business,” people often say, “I don’t know how,” or “I don’t have money to start a business.” That motivated me to write two books describing how to solve both problems.
Sometimes new businesses are started by people who lost their earlier job; sometimes they are started by people in search of more opportunity than their present job. Most startups don’t make it, but a few make their founders very prosperous, and how they do that is the subject of Saving America: How Garage Entrepreneurs Grow Small Firms into Large Fortunes and Objective Prosperity: How Behavioral Economics Can Improve Outcomes for You, Your Business, and The Nation (with Dr. Roger Bailey). Start-ups are key to a nation’s economic growth since research shows most net new jobs are created by companies less than five-years-old. Small businesses account for 62.7% of net jobs created since 1995, accounting for 66% of employment growth over the last 25 years. On average, there are 4.7 million businesses started every year, based on business formation data.
The high startup failure rates are due to multiple reasons, with the most significant being the absence of products or services that solve customer needs better than existing products, poor marketing strategy and implementation, and cash flow problems. In Saving America, I describe the three most important principles that explain start-up success (market segmentation, functional shiftability, global thinking) and an important financial reason startups often fail: TMC (Too Much Capital). TMC causes start-up entrepreneurs to focus on investors instead of customers. Don’t give up your day job until you prove your concept as a start-up!
Frugal consumers able to buy more consumer goods and services, tax policies that reward savings and discourage credit, and government programs and regulatory policies that encourage entrepreneurial activity are also part of the solutions that contribute to individual and national prosperity, explained in Objective Prosperity. Both books are described on my website www.rogerblackwellbusiness.com.
