Wednesday, October 19, 2011

Government Cannot Solve Unemployment

In my new position as President & CFO at Aribex, I attended the Mountain West Capital Network's Utah 100 awards ceremony. The Governor of Utah, Gary Herbert, addressed the unemployment "problem", stating about 100,000 workers in the state are unemployed. Then he issued a challenge for all 83,000 businesses in Utah to hire just one more worker over the next couple of years, almost eradicating unemployment entirely.

"Did he really just say that," I thought to myself. That is ridiculous, on so many levels. But here are the two main reasons why government will never solve unemployment:

First, it's impossible to make unemployment go away. There will always be a percentage of the population that is unemployable due to issues of their own fault--they can't pass a drug test, they can't show up on time, they have a significant criminal record, and so on. A call to employers to hire these folks is unreasonable and wasteful. People's poor choices cannot be solved by government, and asking the employers to try and solve them is a faulty political move--one that entrepreneurs, business owners, and CEOs can see right through!

Second, government should not be focused on asking employers to hire more people. Employers should be responsible for that. Much of government struggles to manage its own budgets, now its trying to make budgetary recommendations to business? Unacceptable. Instead of this nonsensical request, why doesn't the government ask, and then help, businesses be more profitable. Profitable businesses hire people. Businesses that are dumb enough to hire an employee or two because the governor told them to are going to go out of business, making the unemployment problem worse, not better.

So, how can government help businesses be more profitable? That's a question many others have attempted to answer, and I'm sure you have your own opinions of this as well. Perhaps I'll cover that in a future post.

KEY TAKE-AWAY
Government needs to stop trying to solve unemployment and start trying to make businesses more profitable. Then unemployment will solve itself, at least as much as is reasonably possible.