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Job creation should be "Job Number 1"
After bumping along the bottom for months, the U.S. economy finally appears to be picking up steam, although not quite as quickly as we might like.
The last major hurdle to a robust recovery, by many accounts, is the lingering problem of jobless Americans. For two years, the national unemployment rate has been stuck at 9 percent or above. Although the rate now appears to be trending down slightly, it seems clear that anything government and business can do to boost job creation will help stoke the engines of economic growth.
That's why three announcements that crossed our desk earlier this year caught our attention. The first two came as welcome news, while the third was troubling.
First, the welcome news. In late January, Associated Solutions, an Addison, Illinoisbased company that provides material handling equipment and integrated supply chain solutions, announced plans to boost its workforce by 12 percent. The firm said it would be hiring for positions at every level of the company, from service and sales personnel to senior management.
Just a few days later, Frontier Logistics, a Texas-based logistics service provider, said it would build a distribution center in North Carolina. The new DC is expected to add 71 high-paying jobs to the local economy.
While this was great news, it was tempered by a development we learned of a week later—one that spoke to the need for governments to set priorities if they're serious about driving job growth.
Citing what it called an "unfavorable regulatory climate" in the state of Texas, online retail giant Amazon announced that it would shutter a distribution facility in Irving, near Dallas. The subsequent closure came in response to the state's insistence that Amazon pay US $269 million in sales taxes for merchandise orders fulfilled through the Irving facility. Amazon also canceled previously announced plans to expand its operations in Texas. (According to reports in local newspapers, Amazon is now offering to reinstate those plans in exchange for revisions to the tax collection system.)
Meanwhile, Amazon presumably is looking to more business-friendly states—states like Tennessee, which last year offered the retailer tax breaks for opening a fulfillment center there. It's probably no coincidence that Amazon is currently building not one, but two, 1 million- square-foot DCs in southeastern Tennessee. Together, the facilities are expected to create up to 1,400 full-time jobs over the next three years.
It's understandable that states facing crushing deficits would seek to tap all potential sources of tax revenue. But if the choice is between job creation and taxes, priority must be given to jobs. When it comes to business regulation, Texas, it seems, could learn something from Tennessee. Not only have its regulatory requirements cost it existing jobs, but they will continue to inhibit job growth until the state makes job creation, even if only temporarily, "Job Number 1."
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