It’s rather annoying to hear the worst nonsense constantly paraded around like some kind of eternal truth. That “consumers are job creators” is some of that drivel. It only takes a moment to understand why.
I, along with billions of other people, am a consumer. I want a time machine. So do a lot of those other consumers. Where’s my time machine? Here’s my money to create all the jobs in the time machine industry… I’m still waiting…
But that’s an extreme example. Take a simple commodity like fish. There’s a market out there for fish. But it is probably more accurate to say that “hunger” plays a larger role in creating the market for fish than the consumer does. Jobs are created by businesses that supply people with fish. The consumer can certainly choose not to eat fish, but they still need to eat. And if they do stop eating fish, it’s likely that the business that supplies fish to people will shift to supplying them with what they want to eat. But the jobs aren’t created by the consumer – the business is responsible.
To be certain, consumers play a pivotal role in maintaining jobs. If nobody buys a product or service, the business that provides it will soon find itself in deep trouble.
Consumers merely dictate certain demands. (Well, that’s not entirely true, but the topic of manufacturing markets only further illustrates that consumers do not create jobs.) Businesses create jobs and fill those demands.
How some people get this so backwards is entirely a mystery to me.
Having a supply doesn’t create jobs. There has to be a big enough demand, in order for you to have a great enough need to hire people to serve the customers that are demanding. No customers = no jobs. You are not going to hire 10 people and pay them to stand around all day and do nothing, are you?
When a recession hits, this becomes glaringly obvious if you work in an industry that depends on people having disposable cash that they can devote to unnecessary items.
Fish is a bad example, unless you are talking about a seafood dinner in a decent restaurant. Yes, people will buy food when they are hungry, and they will always be hungry, but they will be more likely to buy it at a fish market than a seafood restaurant, when they feel the need to save money. And if they do eat out, they will be more likely to go to McDonalds and get a Filet-O-Fish sandwich than a nice dinner at Red Lobster.
And when a recession hits, fear and job loss leads to people cutting back on spending.
And this leads to more people out of work.
And those jobs don’t come back till people start spending again.
My husband lost his job at a place where was employed for almost 30 years and was unemployed for almost a year due to consumers having a lack of cash (or fearing they could lose their jobs which would cause a lack of cash), and not buying unnecessary items.
He’s a cook, and when people cut back on spending during a recession, they do it first by eating out less. The restaurant industry, except maybe the cheap crappy fast food places, gets hit hard and fast. And finding another job becomes pretty hard when all the restaurants are feeling the same pain and letting people go.
And when he lost his job, we had to depend on his unemployment insurance to carry us through till he found another. And that isn’t at full wages, it’s reduced. So, that meant we had to tighten our belts, not eat out at all, not buy new clothes, not buy anything we didn’t actually need. We even stopped doing laundry at the laundromat to save money, opting to wash our clothes by hand and hang them to dry in the bathroom. Things got so bad for us that we started getting our food from church run food pantries.
And every dollar that we didn’t spend that we normally would have, some business felt that loss. You are kidding yourself if you think they didn’t.
Now combine that loss with the loss from lots of other people just like us. That’s a lot less shoppers coming in to buy new shoes, a lot less buying electronics, a lot less buying drinks at the bar, a lot less going out to see a movie. And a lot more people being laid off because they were being paid to stand around and do nothing all day, because there weren’t enough customers to keep them busy.
If you don’t think that consumers are job creators, if you think a business can exist without customers, then you are not understanding that buy/sell takes 2 to tango, and without someone to buy, there is no sell. And if there is no sell, there is no jobs.
I’m not convinced.
Consumers dictate the demand. (Again with the caveat that marketers can create artificial demand, e.g. fashion.) But the demand doesn’t create a job. It merely creates the opportunity for a job to exist. It’s the fellow that comes along and fills the void that is creating a job, either for himself or an employee.
A demand isn’t a job. It’s an opportunity or an opening. It is required, but it isn’t the creator.
For example, your most recent web site and service wasn’t created by anyone other than you. It is there to fill a need. That need was a motivator for you to create the service. But the need didn’t create it – you did. You’re the one who deserves the credit – not anyone or anything else.
Ah – 1 other thing. There’s nothing inconsistent with there being an unfulfilled demand, e.g. time machines. Just because there is a demand, doesn’t mean that jobs will be created. Trying to say that consumers create jobs is shifting credit unduly. They create the opportunity – but not the job.