Demand = Jobs
- September 4, 2011
- 2 Comments
I have to applaud this article from the Business Insider, because it puts into words so well, something that I’ve been trying to articulate since 2008 (their emphasis):
Now here’s the interesting thing about Groupon: Despite its massive unprofitability, it’s a jobs-creating behemoth. According to its last updated S-1 filing, it’s got 9,625 employees, up from 37 in June 30, 2009.
So awesome, especially since that explosion basically coincides with the bottom of the recession.
But it’s not making money. So why is it adding so many jobs? Simple, because demand for its services and offers has been ridiculous.
Demand = jobs.
Right. It isn’t actually profit that creates jobs. At BP3, we don’t hire more people because we are more profitable and want to spend those dollars on hiring. We hire more people because there is additional under-served demand for our services. The article goes on:
If you offered Groupon a tax break, it wouldn’t make a difference because it’s not profitable. But even if it were, and you cut its corporate taxes, allowing more money to filter to the bottom line, unless that somehow translated into more demand for its products, it wouldn’t need to hire more people.
Again, correct. Higher taxes aren’t “good for business”, but lower corporate taxes don’t lead to hiring (and jobs) either. But hey, maybe this Groupon thing is just an exception. Maybe other businesses with demand are refusing to hire because of their high tax burden? But I haven’t heard of such. SalesForce seems to be doing fine, if you listen to Benioff:
We’re adding more than 1,000 new positions this year. Plus acquisitions. We’re aggressively growing the company….I’m not an economist, I don’t look like an economist. But as I said on our last earnings call, I don’t think there’s going to be a double dip because I talk to customers and they’re all growing, maybe not at 10% or 20% or 30%, but they’re all growing. I feel good about jobs, I feel good about the economy….
There’s demand for BPM as well – and so my colleagues in BPM aren’t seeing the recession or the possibility of one either. Our customers are investing in their businesses (and most of them appear to be hiring in IT). The jobs are just going where the demand of customers is strongest.