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LeadershipPower Sheet

Businesses Keep Spinning Job Growth

By
Geoff Colvin
Geoff Colvin
and
Ryan Derousseau
Ryan Derousseau
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By
Geoff Colvin
Geoff Colvin
and
Ryan Derousseau
Ryan Derousseau
Down Arrow Button Icon
January 13, 2017, 10:55 AM ET

Business leaders and their p.r. advisers are holding a festival of spin on the subject of jobs, and who can blame them? The president-elect is excoriating companies by name for moving or keeping jobs outside the U.S.; ask Ford’s Mark Fields, GM’s Mary Barra, United Technologies’ Greg Hayes, Toyota’s Akio Toyoda, Rexnord’s Todd Alan Adams, or BMW’s Harald Krüger how that feels. So when a company is going to create or keep jobs in the U.S., it’s naturally going to shout that news, and never mind if the “news” reflects plans or circumstances from long before Trump’s election.

Thus Amazon CEO Jeff Bezos announced yesterday that he’ll create more than 100,000 full-time U.S. jobs in the next 18 months; many of them are at warehouses that have been in the works for months. Also yesterday, Taco Bell CEO Brian Nicoll said his business was on track to create 100,000 U.S. jobs in the next five years; that isn’t a new growth projection, just a new way to talk about it. Softbank founder Masayoshi Son met with Trump in December and announced he would create 50,000 U.S. jobs over an indeterminate time; the jobs would result from a previously planned investment of $50 billion in U.S. businesses over several years.

Trump himself joined in the p.r. fiesta, with a spokesman announcing that “The President-elect was pleased to have played a role in that decision by Amazon.” His role apparently consisted of telling technology executives last month to keep jobs in the U.S.

There’s no harm in any of this, except in one way: Repetition of the theme could lead to a widely accepted view that the economy’s purpose is to create jobs. It isn’t. That sounds heartless, but jobs are a byproduct of economic growth, not the end product, and remembering that reality is, ironically, crucial to more people having better jobs. To see why, consider a story from India in the 1990s.

Back then, the Indian government and much of the society believed that big companies existed to provide employment. Tata Steel was one of those companies. Heavily regulated, like all big companies, it promised lifetime employment to every worker, and after 25 years a worker’s son or daughter was also guaranteed a lifetime job. In that world, efficiency was bad; inefficiency was good. The accounting department alone employed 32 chauffeurs, security people, and “peons.” Lots of people had jobs, but they didn’t pay well. How could they, when Tata Steel was 90% less productive than a U.S. steelmaker?

Then in 1991 India suffered an economic crisis and was forced to deregulate its economy. Many people lost jobs (though Tata Steel handled its downsizing with extraordinary compassion). Now efficiency was good, and India’s economic takeoff began. Creating jobs was no longer the objective, but because the economy grew so much faster, hundreds of millions of Indians now hold better jobs and live better lives than before.

Business leaders understand all this, of course. Let’s hope that, in proclaiming their growing U.S. employment, they can avoid suggesting it’s the reason for their existence. The paradoxical reality is that they’ll create more and better jobs by not focusing on creating jobs.

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What We're Reading Today

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Obama ends Cuban 'no visa' policy
President Obama ended the policy letting Cuban immigrants stay in the U.S. without a visa. The special exemption for Cubans had been in place since the 1990s and was opposed by the Cuban government. Its cancellation is Obama's latest step in normalizing relations with the country.  WSJ

Trump's tweet on L.L. Bean causes controversy
The president-elect tweeted thanks to Linda Bean, an owner of L.L. Bean, for her support. Trump also exhorted followers to "buy L.L. Bean" and included the handle to another business she owns. While no rules prevent a president-elect from endorsing businesses, the tweet could violate an FTC rule by not being tagged as an advertisement, since Bean donated $60,000 to a Trump political committee. Fortune

Amazon plans to add over 100,000 jobs
While brick-and-mortar retailers shed employees, Jeff Bezos's company says it will increase its workforce by over 50% in 18 months. Jobs will range from software developers to warehouse workers. Reuters

Building Better Leaders

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Politics reduce tech spending
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Millennials make 20% less than Boomers did...
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Worth Considering

Samsung's leader grilled for 22 hours
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VW to senior leaders: Stay out of the U.S.
Senior managers at Matthias Müller's company were warned against travel to the U.S. after six current and former executives were indicted on charges related to the emissions scandal. The warning extended to unindicted managers. Reuters

An inquiry will investigate FBI Director James Comey's handling...
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Happy Birthday

Campell Soup CEO Denise Morrison turns 63 today.  Brainy Quote

Discovery Communications CEO David Zaslav turns 57 on Sunday.  Crunchbase

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About the Authors
Geoff Colvin
By Geoff ColvinSenior Editor-at-Large
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Geoff Colvin is a senior editor-at-large at Fortune, covering leadership, globalization, wealth creation, the infotech revolution, and related issues.

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