Recipe for Full Employment

The way to create full employment can be found on the back of a box of pancake mix: a recipe.

Fixing any problem requires a methodology, or a recipe/process/method that is comprised of reasonable, practical, and cost effective steps that actually produce a reasonable outcome.  Regardless of the issue (e.g., unemployment, illegal immigrants, education, budget deficits,) you don’t often see public policy makers creating comprehensive, practical, step-by-step methods that actually result in reasonable success.

Here is a basic 4-step recipe to achieve Full Employment by focusing at the local level:

* Use the sales process as job creation process.

** Estimate business growth or sales to hire next employee or create next paycheck.

*** Estimate per capital or household spending required for different types of local businesses    to grow enough to hire their next employee.

**** Create a system to convert local spending into local paychecks.

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* Use the sales process as job creation process

All businesses must sell.  They must sell more of their goods and services to justify the risk and expense of hiring a new employee.  The Sales Funnel is a visualization of the selling process that represents a series of probabilities in the steps that lead to a sale.  When the Sales Funnel is expanded enough to result in a business hiring a new employee, it becomes The Jobs Funnel.

The Jobs Funnel – Using The Sales Funnel to create more jobs in your community.
https://paycheckeconomics.wordpress.com/2010/05/23/the-jobs-funnel-what-local-businesses-must-do-to-create-more-jobs-in-your-community/

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** Estimate business growth or sales to hire next employee or create next paycheck.

Below is link to a short, informal survey I took with some small business owners in my community, at a networking breakfast. I asked them how much they would need to grow to hire their next employee. Half those surveyed indicated they would have to grow 100% or more to hire.  What is needed is a statistic or metric to better define that “growth,” and that can be related to consumer or household spending by industry or business category(e.g. NAICS codes).

Survey showing why job growth is slow: Businesses have to grow a lot to hire and they will only hire one new employee at a time.
https://paycheckeconomics.wordpress.com/2010/06/21/survey-showing-why-job-growth-is-slow-businesses-have-to-grow-a-lot-to-hire-and-they-will-only-hire-one-new-employee-at-a-time/

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*** Estimate per capital or household spending required for different types of local businesses to grow enough to hire their next employee.

By knowing the amount of revenue growth required for businesses to hire their next employee, and the amount of additional, local household or consumer spending required to generate those new business revenues, you can develop a road map to “full employment” (e.g., 5% unemployment rate [UR].)  You actually plan local job creation, base upon local, economic parameters.

With the labor force being approximately half the population, the ratio of population to jobs required to shift the UR 1% is 200 to 1.  That would require that $2/week per capita or $7/week per household to be converted into wages from consumer spending, or household consumption.

For example, to create a job that pays wages of $10/hour or $400/week requires $2/week from the spending of 200 people to generate those wages.  This would be multiplied by a factor for total new business revenues required for a business to hire, and create that next paycheck.

Below are some analyses that provides a measure of economic activity that would be a starting point for lowering the UR 1% in the United States (1.5 million new jobs), Michigan (50,000 new jobs), and South Carolina (20,000+ new jobs) where I live.

An Approach to Lowering the United States Unemployment Rate 1% (on about $20/week)
https://paycheckeconomics.files.wordpress.com/2009/10/united-states-1-unemployment-rate-reduction-03-09_r0.pdf

An Approach to Lowering the Michigan Unemployment Rate 1% (on about $20/week)
https://paycheckeconomics.wordpress.com/2009/09/13/an-approach-to-lowering-the-michigan-unemployment-rate-1-on-about-20week/

An Approach to Lowering the South Carolina Unemployment Rate 1% (on about $20/week)
https://paycheckeconomics.wordpress.com/2009/08/26/an-approach-to-lowering-the-south-carolina-unemployment-rate-1-2/

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.
**** Create a system to convert local spending into local paychecks.

An Approach to Lowering the United States Unemployment Rate 1% (on about $20/week)
https://paycheckeconomics.wordpress.com/2009/10/18/an-approach-to-lowering-the-united-states-unemployment-rate-1-on-about-20week/

For example, to covert local shopping into local jobs requires:

* a transaction system (to covert spending revenues into paychecks)
* a reporting system (to better inform and motivate people to shop locally and create paychecks)
* businesses willing to participate by offering some goods and services for this paycheck creation program
* incentives for businesses to participate
* people who are willing to shop locally
* incentives to motivate people to shop locally and create paychecks

.

The above recipe is one example of how to balance a government budget.  Many types of recipes can be created.  What is important is that the objective be articulated,  a series of steps be defined to meet the objective with reasonable success, and that the steps are executed to achieve a reasonable success.

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