In 2012, economists at the International Monetary Fund analyzed data across years and countries and concluded that in some countries, including America, the financial sector had grown so large that it was slowing economic growth. Using a different methodology, the most prominent researcher on the size and economic value of Wall Street, a New York University economist named Thomas Philippon, estimates that the United States is sinking nearly $300 billion too much annually into finance.
In perhaps the starkest illustration, economists from Harvard University and the University of Chicago wrote in a recent paper that every dollar a worker earns in a research field spills over to make the economy $5 better off. Every dollar a similar worker earns in finance comes with a drain, making the economy 60 cents worse off. via www.washingtonpost.com
Here's where new jobs come to die: the explosive growth in power and influence of the finance sector.
This black hole spreads through the economy in various ways:
That leaves 9% for R&D, rainy days, pay raises, benefits, and training.
Three years ago, Harvard Business School asked thousands of its graduates, many of whom are leaders of America’s top companies, where their firms had decided to locate jobs in the previous year. The responses led the researchers to declare a “competitiveness problem” at home: HBS Alumni reported 56 separate instances where they moved 1,000 or more U.S. jobs to foreign countries, zero cases of moving that many jobs in one block to America from abroad, and just four cases of creating that many new jobs in the United States. Three in four respondents said American competitiveness was falling.
Notes: That's the same Harvard Business School whose researchers pointed out the effects of these other alums. Maybe, they should get together and talk?
My favorite statistic is so often ignored. While U.S. business leaders complain about the current economic uncertainties, the financial burden of regulation, they and their companies are raking in the cash. And they're holding that cash to pay dividends and exercise stock buybacks, all the signs of a mature company with outdated business models and executives looking to maximize their stock options. See above points.
So, when Small Business Saturday is held the day after Black Friday, which is Christmas and Hannukah combined for major retailers, and Citigroup's lobbyists write financial regulations and kill others in the latest Cromnibus Spending bill then there's no need worry about new jobs. They've gone into this blackhole. They won't come back.
They'll pop out the other side in an economy where companies re-invest in their employees more than their shareholders, delight their customers more than their shareholders, and create sustainable business models not just for today's quarterly earnings but for the next decade's annual earning's report. Hopefully, that will be ours sometime real soon.