Job creation should be Job #1
It seems most everyone can feel it, to one extent or another, and it feels good. After bumping along the bottom for months, the economy finally appears to be picking up steam, although perhaps not quite as quickly as we might like.
The last clear and major hurdle to a robust recovery, by many accounts, is the lingering problem of jobless Americans. For nearly two years, the national unemployment rate has been stuck at 9 percent or above. Although the rate now appears to be trending down, 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 two announcements that crossed our desk recently came as welcome news, while another, alas, was troubling.
First, the welcome news. In late January, Associated Solutions, an Addison, Ill.-based company that provides material handling equipment and integrated supply chain solutions, announced plans to boost its work force by 12 percent. The hiring follows the 50-year-old firm's decision last year to expand into engineered logistics and material handling solutions, offering services like analyzing customers' operations for opportunities to enhance effectiveness and reduce overall costs. Associated says it will be hiring for positions at every level of the company, from service and sales personnel to senior management.
Just a few days later, we heard about a DC being built in Star, N.C., by Frontier Logistics, a Texas-based logistics service provider that serves the plastics industry. The new DC represents a $55 million investment on Frontier Logistics' part and is expected to add 71 jobs to the local economy. Even better, the projected average salary for workers at the site is $47,477. That's 70 percent higher than the average income in the region, which, according to state reports, is just $28,028.
While this was great news from two great companies with great leadership and great teams, 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 will shutter a distribution facility outside Dallas. The closure came in response to the state's insistence that Amazon pay $269 million in sales taxes for merchandise orders fulfilled through the Dallas facility—a bill that Amazon has appealed. It is unclear how many jobs this will cost the Lone Star state, but any lost job in the current environment is one too many, especially when it's the direct result of government policies.
The repercussions go beyond the Dallas-area facility. Amazon has also canceled previously announced plans to expand its operations in Texas. Instead, it will presumably look to more business-friendly states as it builds out its distribution network—states like Tennessee, which last year offered the retailer tax breaks and job tax credits 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 budget deficits would seek to tap any and 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 #1.
