The following two charts from the US Department of Commerce’s Bureau of Economic Analysis (BEA) and the Federal Reserve Economic Data (FRED) contrasts the success story of America’s corporations and languishing fortunes of the average American citizen.

This “Corporate Profits” graph shows that corporate profits have more than doubled (+111%) from $0.75 trillion ($750 billion) in 2008 to $1.58 trillion in October 2011 (latest available data as of May 2012).  According to BEA and FRED, US corporate profits are now the highest in US history.  Since major corporations are bulwark of our economy, this is very good news.

In contrast, the “Disposable Income Per Capita” graph shows that the average American citizen (per capita or each individual) has decreased -6% over the same period of time from a high of $34,641 in May 2008 to $32,685 in March 2012.   Real disposable income per capita income is the portion of personal income that is left after personal taxes are subtracted, and thus is the amount of personal income available to people for consumption spending and saving.    Real disposable income per capita income is also an indicator of a country’s standard of living.

So why does Jobenomics make the assertion that the future of US big business depends on deploying its resources to increase America’s overall standard of living?

Today, the US population is 313 million people with only 96 million in the private sector work force.  These 96 million via familial obligations or paying taxes financially support:

• 89 million who can work but are not looking
• 71 million who cannot work due to age, disability, care-giving, etc.
• 35 million who work for the government.
• 22 million under/unemployed who are looking for work.

Since the Great Recession of 2008, the private sector work force has decreased by almost 5 million people while those “Not-in-Labor-Force” has grown over 9 million alone.  In other words, too few are paying for too many.

Of the 96 million people in the private sector labor force, the majority (70 million) are employed by small business that was hit hard by the Great Recession.  To make matters worse, small business received almost none of the trillions of dollars of federal government stimuli, bailouts and buyouts that went mainly to large financial institutions and corporations.  Even though small business still struggles with adverse lending conditions, this community single-handedly produces almost all (95%) of the new American jobs.  The following chart shows the contribution to the US labor force since the beginning of this decade.  Small business generated 3,266,000 new jobs, whereas big business produced a meager 168,000 jobs.

In many ways, the Great Recession contributed to making American corporations the most productive businesses in the world.  Downsizing and eliminating non-productive operations was important for global competitiveness.  Now that big business is economically stable, it is time that it becomes socially more responsive.

If big business continues on its current path of hoarding profits and deploying resources overseas in rapidly growing emerging economies, it will face increasing hostility from the American public who are most interested in domestic growth and jobs.   Joblessness, income inequality and budget deficits are already major issues.  Eventually, corporate taxes will have to rise significantly to cover trillion dollar tax revenue shortfalls that are needed largely for entitlement and welfare payments.   As evidenced by recent European elections, electorates favor increased taxes over austerity programs.  Corporations have a simple choice either to deploy their profits in ways that create win-win scenarios, or let government bureaucrats tax their profits and use the proceeds that best suits government priorites that often emphasize social over economic issues.

From a Jobenomics perspective, big business should consider small, emerging and self-employed business creation as one of their primary means of deploying a portion of their profits for the common good.  While this may seem counterintuitive, small business creation offers many benefits for big business.  First it grows the base (96 million) of the private sector work force, which is needed to support government programs and the needs of the non-working population.   Second, it grows consumers whose purchasing power represents 70% US GDP.  Consumption powers the economy. Decreased consumption public and investor confidence and adversely impacts stock markets.  Third, small businesses are more apt to hire the unemployed, thereby alleviating pressure on big businesses to hire unnecessary workers.  And lastly, big businesses could benefit from alliances with the small business community to provide specialized skills on a subcontractor basis as well as being public relations advocates for big business that support small business and jobs creation.

Jobenomics offers one example for big business to consider.   Jobenomics Harlem is our leading community-based business generator that is designed to produce 1,000 new businesses per year in inner-city Harlem, New York (see Jobenomics Harlem posting).   Jobenomics Harlem has secured a micro-business loan from a leading bank for $20 million with a limit of $50,000 for each individual loan.   Since Jobenomics intends to clone this program in a hundred other cities, major corporations may want to sponsor a community-based business generator, underwrite micro-business loans, and use their human resources for mentoring and training of new small business tailored to their industry.  Energy companies would sponsor green-business and jobs creation opportunities.  Industrial companies would sponsor new business specializing in trades most needed in manufacturing.

Many major corporations complain that they are having trouble finding skilled labor for 21th Century jobs.   Community-based business generators could focus on training, certifying and starting small businesses to meet the future needs of big business.  Not only would corporations help America’s economic recovery, but enhance their public relations while recouping their investments via repayment of the micro-business loans.   What small and emerging businesses need most is “patient capital” and sponsors who understand how business works.   Business creation should be a role for business as opposed to government.   Corporations would be able to get government support and incentives for sponsoring community-based business generations.  The Jobenomics team discussed with leading policy-makers the possibility of tax breaks for corporations that repatriate foreign profits for efforts such as this.  Their response was very positive.

In conclusion, America’s biggest corporations have largely recovered from the Great Recession.  It is now time for them to help others not as fortunate.  If corporations fail to do so, voters and legislators will target corporate profits as a major source of tax revenue.  Rather than have government bureaucrats deploy their capital, it seems that corporations would prefer to invest in projects like the Jobenomics community-based business generators.

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Highlights of this posting, since 1 Jan 2010:

• The US has produced a total of 3,670,000 new jobs, a 48% shortfall of what is needed as measured by the traditional benchmark of 250,000 new jobs per month.
• While the US produced a total of 3,670,000 new jobs an additional 4,648,000 citizens have simply quit looking for work and joined the ranks of the Bureau of Labor Statistics’ category called “Not-in-Labor-Force”.
• The private sector produced 4,180,000 jobs.  95.1% were created by small business.  86.7% were in service-providing industries.  Manufacturing contributed 10.7%.
• The government sector lost -510,000 jobs, most (83.1%) government job losses occurred at the local level.

Between 1 Jan 2010 and 1 May 2012, per the above chart, while the US has enjoyed steady employment growth since the beginning of this decade, America is only producing half as many jobs as needed (48% shortfall).  The US produced only 3,670,000 jobs compared to the 7,000,000 jobs needed as measured against the traditional benchmark of 250,000 jobs per month (250,000 x 28 months = 7 million).   Of the three employment sectors reported by the Bureau of Labor Statistics (BLS), the private sector’s service-providing industries created 3,622,000 jobs and the private sector’s goods-producing industries created 558,000 jobs, and the government sector lost -510,000 jobs.

While the US produced a total of 3,670,000 new jobs since 1 Jan 2010, an additional 4,648,000 citizens have simply quit looking for work and joined the ranks of the Bureau of Labor Statistics (BLS) category called “Not-in-Labor-Force”.  In other words, a million more discouraged workers quit looking than those who found jobs.  According to the BLS, when a discouraged worker quits looking for work, he/she is eventually moved into the Not-in-Labor-Force category—which essentially means that this former worker is in an unemployment limbo and off-the-grid from a working population perspective.  From a Jobenomics perspective, Not-in-Labor-Force citizens should be classified as long-term unemployed.  See Jobenomics Employment Scoreboard: April 2012 for more detail on this disturbing trend.

Private Sector Statistics.  Today, the US private sector employs a total of 110.5 million people.  As shown, 92.4M (83.5%) are in service-providing industries and 18.2M (16.5%) goods-producing industries.   Manufacturing (a sector of the goods-producing supersector) employed 11.8M or 10.7% of the private sector workforce.

Service-providing sector.  The US service-providing sector has grown 80% over the last three decades and averaged 4% growth since the beginning of this decade.

Employment statistics for industries in this sector are ranked by the number of jobs created between 1 Jan 2010 and 1 May 2012:

• Professional/business services: 17,860,000 employees, 1,391,000 jobs created, growth rate 8%.
• Education and health services: 20,249,000 employees, 899,000 jobs created, growth rate 5%.
• Trade, transportation, utilities: 25,252,000 employees, 690,000 jobs created, growth rate 3%.
• Leisure and hospitality: 13,612,000 employees, 679,000 jobs created, growth rate 5%.
• Financial activities: 7,719,000 employees, 40,000 jobs created, growth rate 0.5%.
• Other services: 5,358,000 employees, 40,000 jobs created, growth rate 1%.
• Information: 2,628,000 employees, -113,000 jobs lost, growth rate -4%.

Goods-producing sector.  The good-producing sector currently has 18,283,000 employees, created 499,000 new jobs this decade with a 3% growth rate.  Employment statistics for industries in this sector are ranked by the number of jobs created between 1 Jan 2010 and 1 Mar 2012:

• Manufacturing: 11,947,000 employees, 481,000 jobs created, growth rate 4%.
• Mining and logging: 837,000 employees, 173,000 jobs created, growth rate 26%.
• Construction: 5,558,000 employees, -96,000 jobs lost, growth rate -2%.

While manufacturing has improved over the last 28 months, it has a long way to go (see chart).   Since the total employment of mining industries (oil & gas extraction, coal and minerals mining, logging) is only 7% the size of manufacturing, an increase of 173,000 jobs is significant with a two-year growth rate of 26% versus 4% for manufacturing (see: Jobenomics Mining Initiative).  It also should be noted that the majority of the job gains in the goods-producing industries, including manufacturing, were created by small businesses with less than 500 employees.

Government Sector Statistics.  The total government sector currently has 21,969,000 employees, lost 510,000 new jobs this decade with a negative 2% growth rate.  Employment statistics for entities in this sector are ranked by the number of jobs lost between 1 Jan 2010 and 1 Mar 2012:

• Local government: 14,077,000 employees, -424,000 jobs lost, growth rate -3%.
• State government: 5,071,000 employees, -77,000 jobs lost, growth rate -1%.
• Federal government: 2,821,000 employees, -9,000 jobs lost, growth rate -0.3%.

The government sector continued to lose jobs with 83.1% of all job losses occurring at the local level, 15.1% at the state level and 1.8% in the federal government.  Jobenomics predicts that government job losses will continue to decline and accelerate at the federal and local levels especially if the US economy suffers an economic disruption due to either domestic or foreign events (see: 5 Million Government Layoffs Ahead?).

The Jobenomics “20 by 20” goal is to create 20 million new private sector jobs by year 2020.  To achieve 20 million jobs in a decade, the US needs to create 167,000 jobs per month (20 million/120 months).  As of 1 May 2012, the US should have generated 4,676,000 private sector jobs.  Measured against the Jobenomics benchmark of 167K jobs/month, America is producing jobs at a rate between 73% (3,434,000 jobs per ADP National Employment Report data) and 89% (4,180,000 jobs per Bureau of Labor Statistics data).  Considering the sluggish US economy, this is a relatively good picture.  However, the Jobenomics team is holding with its 2012 forecast that the US economy has a 50% chance of turning for the worse due to potential domestic and foreign disruptions, such as growing US unemployment, new conflicts (especially Iran), and energy crisis with Iran as well as continued issues in the Eurozone.

Of the 3,434,000 private sector jobs created per the ADP National Employment Report (the BLS does not report on small versus large business), 95.1% of all new jobs were produced by small businesses with less than 500 employees.  Large businesses produced only 4.9% of all new jobs.  Very small business with less than 50 employees accounted for 48.4% of new jobs.

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Highlights of this posting:

• In reality, the unemployment rate has not dropped over the last year(s) since those who quit looking are no longer counted as unemployed.
• If all the underemployed, unemployed and Not-in-Labor-Force people were calculated as “functionally unemployed”, the US unemployment rate would be 35%.
• Since 2000, 20 million Americans quit looking for a job and joined the ranks of “Not-in-Labor-Force” according to the Bureau of Labor Statistics.    Since 2010, 4 million Americans quit looking.  These Americans are not included in the official unemployment figures.
• Due primarily to the massive numbers of people who are not looking for work, the percentage of people (63.6%) in the US civilian work force is the lowest since 1981, and is decreasing at by greater numbers in recent years.
• The downward trend in the US working population and the upward trend in the US non-working population pose a serious threat to America’s economy and way-of-life.  Unfortunately, the vast majority of Americans are not aware of these trends.

Every month, the Bureau of Labor Statistics (BLS) publishes unemployment and employment statistics for economic, policy and public decision-making. Unfortunately, few policy-makers, opinion-leaders, media-pundits and citizens understand these statistics.  More importantly, Americans tend to “dumb down” the numbers to one statistic—the U3 rate or “official unemployment rate”.  Jobenomics believes that a basic understanding of unemployment and employment statistics, rates and numbers is essential to good governance, which is the reason that these scoreboards are updated and posted monthly.

The Bureau of Labor Statistics uses the terms “unemployed” and “employed” to describe what Jobenomics calls the Working Population which represents less than a half of the US population.   The majority of Americans who cannot or will not work are in a group that Jobenomics calls the Non-Working Population.   A glass half-full analogy may provide a useful framework to describe the Working Population as contrasted to the Non-Working Population.

According to the Bureau of Labor Statistics (BLS) the basic concepts involved in identifying the employed and unemployed are quite simple:

• People with jobs are Employed.
• People who are jobless, looking for jobs, and available for work are Unemployed and those who are marginally employed are deemed Underemployed.
• People who are neither employed nor unemployed are not in the labor force.   Those who have no job and are not looking for one—are counted in the Not-in-Labor-Force.

These three categories comprise the “civilian noninstitutional population”[1], which equates to 242,784,000 people as of 1 May 2012.  Since the total US population is 313,482,000 (US Census Bureau data[2]), there are 70,698,000 children, elderly, disabled, serving in the military, incarcerated, etc. who are not counted in the BLS’ civilian noninstitutional population.  These uncounted 70 million are in a category named All Others by Jobenomics.

Therefore, from a Jobenomics perspective:

• Working Population = Employed + Underemployed + Unemployed = 154.4 million.
• Non-Working Population = Not-in-Labor-Force + All Others = 159.0 million.

As shown on the graphic above, 154.4 million are in the Working Population, which includes 132.0 million employed and 22.4 million people who have a marginal job, no job, or are looking for work.  The BLS calls this group, the “Civilian Labor Force”, which is defined as citizens, who have jobs or are seeking a job, are at least 16 years old, are not serving in the military and are not institutionalized.

The 159.0 million in the Non-Working Population include 88.9 million Not-in-Labor-Force and 70.1 million others not included in the labor force (i.e., the difference between the total population and the BLS’ civilian noninstitutional population).  Those who have no job and are not looking for one are counted by the BLS as Not-in-Labor-Force.  Many who are not in the labor force are going to school or are retired.  However, many more have simply quit looking and are living at home, occupied with illegal pursuits, or on welfare.  To truly understand the magnitude of the unemployment problem, America needs deeper insight into the vagaries of its non-working population that now represents more than half of all Americans.

The downward trend in the US working population and the upward trend in the US non-working population pose a serious threat to America’s economy and way-of-life.  These trends are shown in the following two graphs.

 Over the last three decades the number of people working as a percentage of the working population (civilian noninstitutional population) increased steadily to a peak in year 2000 as shown above.  After year 2000, the US working population suffered a serious decline.   While the Great Recession in 2008/09 exacerbated the situation, the decline started in the millennium’s boom years.  Today, only 63.6% of our citizens are in the labor force, which is the lowest it has been since December 1981.   The primary reason for the dramatic drop is largely due to those that simply have quit looking for work and are now categorized as Not-in-Labor-Force.

Those in the Not-in-Labor-Force category have grown consistently since year 2000.  Since 2000, this category grew by 20 million people.  Since 2010, it grew over 4.6 million people—a rate 30% higher from the decade of the ‘00s. When a discouraged worker quits looking for work, he/she is eventually moved into the Not-in-Labor-Force category—which essentially means that this former worker is in an unemployment limbo and off-the-grid from a working population perspective.  From a Jobenomics perspective, Not-in-Labor-Force citizens should be classified as long-term unemployed.

If all underemployed, unemployed and Not in Labor Force people were calculated as “functionally unemployed”, the US unemployment rate would be a whopping 35%. The Bureau of Labor Statistics (BLS) calculates six unemployment categories (U1 through U6) every month.  The three most often reported categories are the so called Long-Term U1 Rate, the Official Unemployment U3 Rate, and the Total Unemployment U6 Rate.

As of 1 May 2012, the U1/U3/U6 rates equated to 4.5%/8.1%/14.5% or 6.9/12.5/22.4 million people respectively.   These rates and numbers are calculated as a percentage of the US Civilian Labor Force, which currently stands at 154.4 million Americans–less than half of the US population.  The Jobenomics “functionally unemployed rate” equates to 35% of the US population or 111.3 million people.   111.3 million is calculated by adding the BLS’ U6 number (22.4 million) and the BLS’ Not-in-Labor-Force number (88.9 million).   Dividing 111.3 million by the total US population of 313.5 million yields a functionally unemployed rate of 35%.

Understanding the functionally unemployed rate of 35% is a much better indicator of economic distress, than the much lower numbers indicated by the U3 “official” unemployment rate that is most often watched and reported.

As of 1 May 2012 (April data), the U3 Rate was 8.1% — 0.9% lower than the September 2011 rate of 9.0%.  Each consecutive month, these incremental drops made headlines around the world as signs of US economic recovery.  However, buried in the newsprint, millions of Americans were reported to have “simply quit looking for work”.  Where did these people go? As discussed earlier, they went to Not-in-Labor-Force limbo.

The table above is derived from the US Bureau of Labor Statistics, Table A-1, Employment Status of the Civilian Population.  It shows from September 2011 through April 2012 the official unemployment rate (U3) dropped from 9.0% to 8.1%, which equates to a decline of 1,397,000 people.  However, the table also shows that 2,812,000 people joined the Not-in-Labor-Force category over the same period of time—an increase of 1,415,000.

If the “official unemployment rate” was adjusted for these 1,415,000 workers joining the Not-in-Labor-Force, the official unemployment rate would be 9.0% as opposed to 8.1%, which is currently being heralded as a “significant sign” of economy recovery.  In other words, the unemployment rate has not dropped over the last year(s) since those who quit looking are no longer counted as unemployed.

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The phrase, “Nation of Shopkeepers”, did not originate with Napoleon. It first appeared in The Wealth of Nations by Adam Smith in 1776.   Smith believed that when individuals pursue their self-interest, they indirectly promote the greater good of society. He argued that merchants, seeking their own self-interests, contribute significantly to the commonwealth by producing vital goods, services and tax revenues.  Without this “invisible hand”, societies would be incapable of effectively pursuing self-sufficiency, prosperity and wealth creation.

Recent articles in prestigious publications, like USA Today and The Economist, make similar claims that a nation of small businesses cannot compete in the global marketplace because:

• Big is better.  Big firms employ more, are more productive, can reap economies of scale, can focus resources on innovation, offer higher wages, and pay more taxes.
• Smaller means weaker.  Small businesses fail at greater rate than big businesses.    Small businesses are not particularly adept at creating jobs, at least not the best jobs.  Almost all the 6 million companies in the US are small businesses, with fewer than 500 workers.  Most small business owners just want to be their own boss and never expect to hire more than a few employees.

Like Napoleon’s premise that a nation of shopkeepers cannot compete, those that believe that a nation of small businesses cannot compete are simply wrong.  Small business is America’s economic backbone—producing $6 trillion worth of annual products and services and employing half of the American private sector work force.  Moreover, it is small business, not big business, which is the foundation of job creation.  Since the beginning of this decade, small business generated 95% of all new American jobs (see: Employment Scoreboard: March 2012).  As far as innovation, the Small Business Administration (SBA) reports that small business produce 16.5 times more patents per employee than large firms.

There are not 6 million small businesses in the US.  There are 27.3 million small businesses.   The latest available Census data show that there were 5.9 million firms with employees and 21.4 million without employees in 2008. These 27 million small businesses pay 43% of total US private payroll and are responsible for 97.5% of all identified exporters with 31% of export value as reported by the SBA Office of Advocacy.  Just as important small businesses do not export jobs like big businesses.

The perception that small businesses regularly fail is only partly true.  While the failure rate is high, so is their entrance rate.  A recent landmark Census Bureau study showed that small establishments are no more inclined to exit business than large businesses.   This misperception exists because of the high exit rate of micro-firms (1-4 employees), which averaged 18.4% over the last three decades.  While this rate was high, their entry rate was even higher at 21.3%, therefore producing a net gain of 2.9% over the period.  The entry/exit rate difference for all firms was only 1.9%.  Looking at this data from a different perspective, compared to all businesses, micro-firms were more likely to succeed, which is counter-intuitive to common perception.

More recent data, reported by the ADP National Employment Survey, shows that very small businesses with 1-49 employees grew +7% over the last dozen years, whereas small businesses with 50-499 employees and medium/large businesses with more than 499 employees lost -4% and -16% respectively over the same period of time.

According to a recent Kauffman Foundation Study, job growth in the US is driven entirely by startups.  The study reveals that, both on average and for all but seven years between 1977 and 2005, existing firms are net job destroyers, losing one million jobs net combined per year.   By contrast, in their first year, new firms add an average of three million jobs.  According to the Kauffman Foundation, “Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies. But the data from this report suggest that growth would be best boosted by supporting startup firms.”

From a Jobenomics perspective the government’s primary jobs creation role is to create an environment where small, entrepreneurial businesses can flourish.  Unfortunately, government officials are locked in a mindset that a nation of “shopkeepers” cannot compete and the solution to growing the economy is a combination of big business and government. Perhaps the greatest factor contributing to this mindset is the scarcity of business owners working in government.  Furthermore, entrepreneurs and serial-entrepreneurs are almost completely absent in government decision-making.

Bureaucrats tend to view risk as a liability, whereas entrepreneurs embrace risk as an opportunity.  Serial entrepreneurs embrace multiple ideas, get companies started, and transfer leadership to operational managers so they can move on to new ventures.  Steve Jobs is an example of a serial-entrepreneur who created multiple iconic businesses.  Our country is blessed with tens of thousands of proven serial entrepreneurs.  Unfortunately, few serial-entrepreneurs serve on government economic councils that are replete with politically-correct and process-driven corporate chieftains and economists.

If small business is America’s economic engine, and if entrepreneurs and innovators are essential to business startups, then how does America change the government mindset?  The upcoming presidential election debates are a good place to start.

From a Jobenomics point-of-view, neither the President nor the leading Republican candidates have yet articulated a viable jobs creation strategy.  Virtually all of the proposed job creation plans are top-down political agendas oriented to ideologically-driven constituencies.  Almost every political speech contains references to a reformed regulatory environment, better tax incentives and cuts, debt and deficit reduction, helping the middle-class, importance of small business, revitalized manufacturing, green jobs, environment protection, energy independence, stimulation packages, tort reform, reciprocal trade agreements, and increased exports as ways to increase jobs.  While all of these areas are necessary, they are insufficient.

Political focus has to be on business creation, not job creation.  In recent years, small, emerging and self-employed businesses have been responsible for virtually all of America’s new jobs.   Yes small businesses fail, but enough survive to prosper our society.   Seven out of ten startup firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more.  From an entrepreneurial perspective, these are very lucrative statistics that should be the bedrock for a national business initiative to create millions, or tens of millions, of new small and self-employed businesses by year 2020.

A nation of small businesses empowered by 21^st technology can compete globally in ways never before thought possible.  It is almost inconceivable that today half of America’s GDP is generated by 27 million small businesses.   It is equally inconceivable that 52% of these businesses are home-based.  Jobenomics envisions that the American labor force will continue to be transformed by small, largely self-employed, home-based businesses. This transformation will be lead by 70 million members of America’s millennial generation who will monetize the internet and social networks in ways not yet conceived.  The country that learns how to monetize social networks, like Facebook with 825 million users, will be transformed almost overnight.  Tens of millions of new businesses (mostly small and self-employed) will be created.

American innovation, ingenuity and entrepreneurship are the keys to a prosperous future where everyone who wants to work can find a job.  A national small business initiative starts with an achievable vision.  President Kennedy focused American science and technology on getting to the moon in a decade.  In comparison, the Jobenomics 20 million new private sector jobs by year 2020 (20 by 20) goal should be very achievable.  If China can lift 400 million peasants out of poverty in two decades, America can create 20 million new private sector jobs in one decade. Adding millions of new “shopkeepers” to a nation that is already of nation of small businesses could boost our commonwealth to new economic heights.

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The initial JCID goal is to implement a US/foreign business incubator in a location that can be duplicated nation-wide.  The long-term goal is to create  thousands new US businesses as a result of new US/foreign industrial and manufacturing joint ventures.  The Jobenomics team is currently in discussion with metropolitan area leaders regarding the location for the first JCID facility.

In the 1980s, the Japanese were motivated to build automotive factories (Toyota, Nissan and Honda) in the southeast US in order to build brand, facilitate trade, and mitigate growing “buy-American” sentiment that was largely caused by the 1982 recession and high American unemployment rates.  In the 2010s, the Chinese are likely to adopt a similar strategy, and have financial and manufacturing motives to do so.  Establishment of industrial, research and development, assembly, distribution and warehousing operations within the US would provide Americans with jobs and would help bridge the export/import gap between the world’s first and second largest economies.

JCID’s main functions include an Executive Business Program, an EB-5 foreign investor program, and an industrial park/business incubation center.  The Executive Business Program consists of a 12-week training program for foreign executives who are responsible for starting US businesses.  The program will feature a school of entrepreneurialism that will introduce these executives to American culture and business centers of excellence.  Business education will consist of formal classes taught by leading US businessmen and academics, with visits to leading US financial institutions, and leading local, state and federal policy-makers and business institutes/associations.  The EB-5 program will also assist executives in obtaining resident visas for lifelong access to their US-based business.  The industrial park/business incubation center will help locate, finance and implement new US/foreign joint ventures in the United States.

The JCID Executive Business Program will last 12 weeks, with approximately seven weeks for instruction, and five weeks of excursions to:

• Meet with major financial institutions, Fortune 500 companies and entrepreneurial organizations.
• Visit the executive, legislative and judicial branches, as well as leading trade organizations, think tanks and various decision-makers and opinion-leaders.
• Conduct local trips to cultural centers, meetings with business/ government leaders, and leading business schools/universities.
• Allow one week of open time, to tour the United States or return home.

Upon completion of training, the foreign executive will:

• Have a thorough understanding on:
• US business environment, business sectors and practices, and the US workforce.
• Governmental trade, regulatory and legal requirements.
• How to establish a business in the US and obtain additional investment capital.
• Have high level contacts with business, government and financial leaders, as well as potential joint venture partners.
• Be given the opportunity to obtain permanent US entry visas, driver’s licenses, bank accounts and entry into leading US business schools.

Senior leaders in government and major conglomerates in China, South Korea and Japan have expressed interest in the Junior Executive Program, as well as the EB-5 visa program. $50M worth of foreign investment capital is expected, which will be used to incubate new US businesses.  JCID is also working with private sector investors to raise several hundred million dollars’ worth of capital to help start some major manufacturing enterprises with an initial emphasis on assembly, distribution and warehousing operations of electronic, computer and appliance manufacturing that is dominated by Asian manufacturers.

EB-5 Program:  Under the Immigration and Nationality Act, immigrant visas per year are available to qualified individuals seeking permanent resident status on the basis of their engagement in a new commercial enterprise.  There are approximately 100 EB-5 Regional Centers in the United States.  EB-5 centers are for foreign investors and prominent individuals seeking permanent resident status (Green Cards) based on a minimum investment in the US of $500,000 each, which will create a minimum of ten US jobs, or maintain ten jobs, in a troubled US business.  The JCID EB-5 Immigrant Investor Program could be oriented towards the manufacturing sector.

The JCID management team has identified several hundred potential investors in Asia (China, Japan and South Korea) who are willing to invest in a limited partnership with properties, buildings and new businesses.  Permanent US visas are very attractive to foreign businessmen who often have difficulties with entry visas to the US.  These visas are also attractive for foreign student attending colleges and universities in America.

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Jobenomics defines functional unemployment as the total number of underemployed, unemployed and not-in-labor-force as reported by the US Department of Labor’s Bureau of Labor Statistics (BLS).  In plain English, the ranks of the functionally unemployed includes US citizens currently: (1) underemployed with marginal or part-time jobs, (2) unemployed with no job yet still looking, and (3) unemployed with no job and not looking.  This third category is by far the largest group as well as the group that is most overlooked and under-reported.

The Jobenomics functional unemployment number (111 million) consists of the BLS’ U6 unemployment number (23 million) and the BLS’ “Not in Labor Force” number (88 million).   111 million functionally unemployed out of a total US population of 312 million yields a functional unemployment rate of 36%.

• The BLS defines U6 as “the total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.”
• The BLS defines not-in-labor-force in the following manner: “the US labor force is made up of the employed and the unemployed.  The remainder—those who have no job and are not looking for one—are counted as ‘not in the labor force.’”

Jobenomics acknowledges the gray areas between working and not working, and in-the-labor-force and not-in-labor-force.   For example, approximately 20 million postsecondary school (college) students are considered not in the labor force.  Nevertheless, most students do not work and are being supported by either familial or government sources.  This is also true of the general non-working population.  If a person is able to work but is not working, that person has to be supported by someone.  With the exception a few independently wealthy people, most non-workers are supported by families or government.  If they are working, they are likely to be independent of government handouts and likely paying taxes to support government programs and services.

As shown above, American decision-makers, opinion-leaders as well as the American public need a complete picture of all non-workers in order to formulate a viable jobs creation, economic and welfare strategy.  A nation’s economic health depends on a proper balance of the employed and unemployed.  Focusing on narrowly defined groups inhibits good decision-making.  To put the functional unemployment picture into better perspective, one must examine recent trends.

Prior to year 2000, the civilian labor force and the functionally unemployed usually increased in unison in relation to America’s ever growing population.

Since year 2000, the US civilian labor force grew by 11.1 million people or 8%.   During this same period of time, the functional unemployment number grew three times as fast (32 million or 40%) in relation to the civilian labor force.

In the last five years, since the Great Recession of 2008, functional unemployment grew 17% (16.27 million) while the civilian labor force lost -0.15% (-231,000).  If adjusted for population growth (8.2 million or 2.7%), the trends for the last five years would even paint a more austere picture.

If these trends continue unabated in the future, the functionally unemployed could equal the civilian labor force by 2021.

Our previous article (Unemployment Scoreboard: Feb 2012) compared the “official” U3 unemployment rate (8.3% or 12.8 million) versus the Jobenomics functionally unemployment rate.  Now let’s take a look at the so-called official U1 Long-Term Unemployment Rate.  The BLS defines the U1 Long-Term Unemployment Rate as “persons unemployed 15 weeks or longer, as a percent of the civilian labor force”.  The U1 is currently reported as 4.9% or 7.6 million Americans.  However, these 7.6 million are still looking for work.  When they stop looking, they become one of the 88 million in the not-in-labor-force category, which receives little public or media attention.  From a Jobenomics perspective, the number of “long-term” unemployed is much closer to 95.6 million than 7.6 million.

If America is going to solve the unemployment challenge, we must understand the scope and magnitude of the challenge that faces our nation.  Jobenomics firmly believes that this growing labor force problem is largely solvable via small, emerging and self-employed business creation.  The Jobenomics 20 by 20 Goal of 20 million new private sector jobs by year 2020 includes programs for the functionally unemployed.

For skeptics who believe that people would rather handouts rather than a hand-up, Jobenomics disagrees.  Our current national system of handouts, welfare and entitlement programs is essentially a non-work magnet.  Without a counter-magnet, people have no choice but subsistence on the government dole, which will eventually (probably soon) run out.   Jobenomics, and programs like it, provide opportunities for fellow citizens currently in the ranks of the functionally unemployed.

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Today’s path to prosperity cannot be achieved through incremental changes to the status quo.  Nor can prosperity be achieved by top-down solutions.  While reduced bureaucracy, less regulation, and better financing to the base of America’s economic pyramid will help, these measures alone will not lead us to prosperity.  The path to prosperity resides mainly in our citizenry and our collective resolve to generate viable opportunities for all to achieve their American dream.  A nation divided against itself cannot stand.  This was true when Abraham Lincoln said it.  It is true today.

Over the last thirty years, America lost its focus on economic fundamentals.  $50 trillion of public and private debt caused by lavishing spending is only a symptom of a larger issue.  The American economic engine stalled because we turned from producing to speculating at all levels of or society – Main Street, Wall Street and Washington.

There is an old adage that states there are three ways to make money: (1) by your own hands, (2) by someone else’s hands, and (3) by making money-on-money.  Over the last three decades, making money-on-money became the first choice of Americans from Wall Street to Main Street to Washington.  Wall Street over-leveraged exotic financial instruments.  America’s largest corporations now make as much money on financial services as they do manufacturing.   Main Street over-extended itself by buying oversized homes, investing in the stock markets and 401Ks, and maxing out credit.  Washington not only let this happen, but became the largest trader of toxic financial instruments (mortgage-backed securities) on the global secondary market.

The path to economic security begins by changing America’s negative attitude towards business.  At best, Americans have become ambivalent towards business.  Business is taken for granted.  It is often looked upon as a necessary evil, checkbook, or social service provider, as opposed to the economic solution.  Anti-business sentiment causes big businesses to be cautious, limit hiring, close operations, and outsource overseas.  It is estimated that 25 million American jobs have been outsourced to China in recent years.   When iconic American companies, like Apple, employ more Chinese than Americans, there is a problem. Anti-business sentiment encourages small business to go out of business, layoff employees, and defer expansion.  Equally important, anti-business sentiment discourages business investment which is needed to start new businesses and grow existing businesses.

The only meaningful way to fix the American economy involves a comprehensive plan involving economics of business, job, wealth and tax revenue creation—the Jobenomics credo.  The Jobenomics Plan for America emphasizes small, emerging and self-employed businesses.  Small business is the US economic backbone.    Small business (less than 500 employees) employs 84% of the total US civilian labor force.  There are 6 million US small businesses and 22 million self employed businesses.  Since the beginning of this decade (2010s), small business generated 97% of all new jobs compared to large businesses that have produced only 3%.  Small business produces $6 trillion annual revenues, which equates to the second largest economy in the world.

If America wants to reverse its economic decline, small, emerging and self-employed businesses will have to take the lead role.  In this regard, the Jobenomics’ Team has instituted a dozen highly-scalable “proof-of-concept” business creation initiatives that can generate tens of thousands of new small, emerging and self-employed US businesses.  Current Jobenomics initiatives involve: community-based business generators, women-owned businesses initiative, veterans-owned businesses, a nation-wide system of electronic-waste recycling plants, energy and green job programs, cloud computing projects, direct-care centers, business ministries, real estate owned properties programs, minerals exploration and mining projects, a direct sales initiative, and foreign-owned US businesses and investment projects.  While most of these initiatives are in the planning phase, public response has been overwhelmingly enthusiastic.  The basis for the public’s enthusiasm resides more in the potential as opposed to the initiatives themselves.   If several hundred members of the Jobenomics team can implement businesses that could scale to tens of thousands of jobs, what could America do writ-large with a national level program?

America’s focus has to be on private sector business innovators and entrepreneurs.   The Jobenomics 20 by 20 Plan calls for small and emerging business innovators to generate 18 of the 20 million new jobs required for economic recovery by year 2020.   On a level playing field, small businesses can operate internationally.  In the near term, America needs to focus on business creation in the service-providing industries as opposed to the goods-producing industries (predominantly manufacturing, construction).  Why?  Because 78% of all American jobs are services-related, and service industry jobs can be implemented much faster than other industries.  Rapid implementation is essential to enhancing consumer and investor confidence.

America has faced many historical crossroads and has repeatedly chosen the path to prosperity.   Several hundred years ago, the vast majority of Americans worked on the farm.  Today, only one percent works in agriculture or ranching.  Over the last hundred years, the vast majority of Americans lived in rural areas.  Today, eighty percent live in urban areas.   Fifty years ago, half of our citizens worked in factories.  Today, eight percent of our workforce is employed in manufacturing.  America now faces yet another crossroad.  One path leads to continued decline.  The other path leads to renewed prosperity.  Big government, big business and top-down strategies are essential to a strong economy.  However, small business has been, and will be, the engine of economic and social transformation.  With the decline in manufacturing, construction and government funding, urban areas are struggling to support jobless masses.  Empowered by 21^st Century technology and public support, small business has the wherewithal to employ tens of millions, create wealth and transform our nation.

Transformation will be lead not only by traditional innovators and entrepreneurs, but by non-traditional Generation X’ers and Generation Y’ers who are the most qualified people to monetize the internet and social networks.  Facebook alone has 800 million users.  The country that learns how to monetize social networks will be transformed almost overnight.   Tens of millions of new businesses (mostly small and self-employed) will be created.  Millions could migrate from urban to rural or virtual communities, and create a new American way-of-life to fulfill a different American dream based more on self-sufficiency and economic independence than wealth creation.  70 million Generation Y’ers are now entering the workforce.  They are tech-savvy, team-oriented and socially conscious.  They have a much different view of corporate culture and how to do business.  Most importantly, they own the future.

America’s future depends on sustainable, environmentally-friendly communities that will be more rural/virtual than urban.  Self-employed, home-based business could be the norm.  Today, there are 22 million self-employed, home-based businesses.  Tomorrow, it could be two or three times as many.  To empower growth of highly-networked small businesses, a national broadband system is essential.  From a Jobenomics perspective, building a national broadband system is the most important thing that government and big business can do for jobs creation.  Today, 40% of American households have no broadband or high-speed access and 30% have no internet access at all—mostly in rural areas.  While America has the largest total number of broadband subscribers, internationally the US ranks 15^th per capita when adjusting for population size.  A state-of-the-art national broadband system is tomorrow’s business superhighway.  Just as the railroads opened the American West to commerce and Eisenhower’s interstate highway system facilitated explosive economic growth, a national broadband system will enable e-commerce and e-business between billions of people and organizations across the planet.

In conclusion, the highest percentage way to reverse America’s economic decline is to focus on business creation with emphasis on small, emerging and self-employed businesses.   Jobenomics Community-Based Business Generator projects, like Jobenomics-Harlem, are designed to create 1,000 new small businesses per year per city.  The Jobenomics Women-Owned Business initiative estimates that up to 7,000 new, predominantly home-based self-employed businesses could be created by the end of the decade.  And, these are only two of the twelve proof-of-concept initiatives that the Jobenomics team is trying to implement.  If America would implement a national small business initiative with initiatives of this nature, we could have an excellent shot at reversing our economic decline.  It all starts with an achievable vision.  President Kennedy focused American science and technology on getting to the moon in a decade.  In comparison, the Jobenomics 20 million new private sector jobs by year 2020 (20 by 20) goal should be very achievable.

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While publicly venerated for patriotism and service, veterans have a much harder time finding work than most citizens. Veteran unemployment rates have been consistently higher than average citizens.   While the job market is slowly improving for most Americans, it’s moving in the opposite direction for Iraq/Afghan vets.  Veterans, aged 18 to 24, have a 30% jobless rate, up from 18% a year earlier. For for black veterans, aged 18 to 24, the unemployment rate is approching 50%.   Returning combat veterans need a “hand-up” more than they need a “hand-out”.  More specifically, they need jobs, which are in short supply in today’s economy.  Combat veterans face even a more difficult challenge after being in austere conditions, many of whom face degrees of post dramatic stress syndrome and other combat related disabilities.  Of the 2.2 million Iraq/Afghan vets, 624,000 (28%) have filed for some sort of disability with the Veterans Administration.

JVC will focus primary on combat veterans (soldiers, sailors, airmen and marines) returning from Operation Enduring Freedom (Afghanistan) and Operation Iraqi Freedom (Iraq).  The goal of this training is to help veterans transition into civilian life via a 6-month business training and creation program.  JVC is designed to provide an environment that will address the challenges of a successful transition from combat to civilian life as well as helping the vet start a SDVOSB or VOB.    Successful creation of a SDVOSB or VOB will provide veterans their own company as well as making them more competitive in getting a job at an established company, whether on a full-time (W2) or a part-time (1099) basis.  Having their own company will also build confidence in their ability to function in the civilian workforce and greatly shorten the transition time from combat to workfare.  While accolades from the American public are extremely gratifying, providing meaningful employment opportunities are the highest form of appreciation for their service and sacrifices.

Via the Jobenomics movement, JVC has agreements with leading entrepreneurial, business development, academic, financial and veteran experts and networks.  JVC will use proven professionals, human resources personnel and college and vocational placement specialists to aid in the transition from military to civilian life.  JVC features wellness programs, social events, excursions and motivational speakers. By the end of the 6-month program the vets will have:

• A thorough knowledge of business practices on how to set up and run a successful small business taught by successful entrepreneurs and leading instructors with expertise in small business creation and implementation.
• An established SDVOSB or VOB with:
• An Employer Identification Number (EIN), incorporation (S-Corp, C-Corp or Limited Liability Corporation), and the essentials to run a fully operating company (accounting systems, business plans, legal/regulatory, branding/marketing/sales, financing, etc.).
• All vets will be supplied a computer with accounting, business planning and website/social networking systems.  Training will be also provided including how to obtain appropriate accounting (e.g., book keeping and CPA), information technology, and sales/marketing/ advertizing/branding support after graduation.
• All registration/licensing completed in the state and municipality of their choosing.
• Supplementary business systems (e.g., website, social networking, bank accounts, etc.) that will facilitate the promotion of SDVOSB or VOB growth.
• Supplementary education while at the JVC, including.
• Enrollment in an on-line learning course on other on-line universities to pursue continuing education and certification, which will be initiated and taught by qualified instructors while at the Center.
• Access to micro-business coaching and micro-business financing from private sector sources during and after training at the Center.
• A JVC certificate of completion from and any supplementary certifications from the academic organizations affiliated with the Center.
• Potential classes with local accredited academic institutions.
• Understanding on how to access US government grants, veterans set-aside funding and investment capital (debt and equity financing) from private sources (commercial banks, investment banks, and high net worth individuals/angel investors).  Jobenomics is in the process of setting up micro-business loans for the JVC similar to the $20 million micro-business loan program (loans ranging to $50,000 for qualified new businesses) that was initiated for the Jobenomics-Harlem program.  The Center will also work with municipal, state and the federal government to underwrite the new SDVOSB/VOBs.
• Low cost business incubation facilities and/or offices at local industrial/business parks.
• A network of entrepreneurial organizations and an on-going business support network.

The JVC, via the national Jobenomics team of entrepreneurs and faculty, has world-class instructors, small business entrepreneurs and big business leaders.  These instructors, entrepreneurs, business leaders are from prestigious academic, entrepreneurial networks (like the 20 year old CEO Space entrepreneurial network with a world-class faculty and a network of hundreds of thousands of small business leaders across the US) and Fortune 500 executives who are willing to volunteer to help returning combat veterans.  The leading aerospace and defense corporations have expressed an interest in working with the JVC to outsource work to these newly created SDVOSB or VOB.

JVC pilot projects are currently being targeted for locations in Massachusetts, Texas and Nevada.

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Mining is defined as oil and gas extraction (oil & gas), coal mining (coal), metallic and non-metallic minerals mining and quarrying (minerals), and support activities for mining (exploration & support).  Industries in the exploration & support category provide exploration (except geophysical surveying and mapping) and support services, on a contract or fee basis, for the mining and quarrying of minerals and for the extraction of oil and gas. Exploration includes traditional prospecting methods, such as taking core samples and making geological observations at prospective sites.

As of 1 Jan 2012, at total of 776,000 American were employed in the mining sector, of which, 48% (374,200) were employed in exploration & support, 24% (186,800) in oil & gas, 17% (129,300) in minerals and 11% (85,700) in coal.

Due to the highly-advertised debates between environmentalists and mining industry advocates, America’s focus has been largely on oil, gas and coal.   Energy independence, offshore and domestic drilling, oil spills (BP and Exxon Valdez), Keystone pipeline, oil shale and oil sands, natural gas reserves, clean coal, hydraulic fracking, and environmental protection are dominant issues.  The Jobenomics position on these issues is that America’s oil, gas and coal reserves are massive and can be exploited in an environmentally-friendly manner.

The debate between the two big E’s, economy and environment, needs to be more collaborative as opposed to adversarial.   Economic and security implications of energy independence and jobs creation are rising in importance.   Environmental protection is also a critical issue, but environmentalists should not have near-veto power over exploitation of critical national resources and related business and job creation.

Jobenomics believes that exploitation of the mining sector could produce a million new, high-paying, private sector jobs this decade in an environmentally-friendly manner without a significant impact on the environment.  There is a growing argument from the political right that the Environmental Protection Agency be eliminated.  Jobenomics believes that the EPA needs to have a place at the table for national level initiatives.  However, the EPA needs to be reengineered to be more business-friendly in order to enable businesses to be more environmentally-friendly.

The Canada-to-Texas Keystone oil pipeline serves as an excellent example for a large scale national initiative.  According to the US Chamber of Commerce, the Canada-to-Texas Keystone oil pipeline could create could create as many as 250,000 permanent US jobs. More realistic assessments put the number of direct pipeline jobs at 20,000.    From a Jobenomics perspective, adding one more pipeline to our national pipeline grid (shown) should be a no-brainer.  From an environmentalist perspective, the Keystone pipeline could be a collaborative effort to implement the next-generation, environmentally-friendly pipeline.

In addition to major national initiatives, Jobenomics believes there is vast potential in growing small and emerging mining businesses that could generate millions of new jobs.  In this regard, Jobenomics is working with small and emerging businesses involved in: copper, uranium and gold mining, geophysical and geospatial exploration, hydraulic fracking, aggregates quarrying, natural gas to diesel fuel conversion, CO² sequestration, synthetic fuels, as well as a number of mining technology and service companies.

The Jobenomics Mining Initiative recently toured the Rosemont Copper mine near Tucson, Arizona.  Rosemont is advertised as the most modern and environmentally-friendly mine in the world.  Environmentally, land, air and water protection is a top priority.  Rosemont’s environmental engineering includes: a low footprint, low water usage and recycling, air quality protection, solar and renewable energy, permanent land conservation and land reclamation starting day one.  Economically, the independent Arizona State University Report 2009 states that Rosemont Copper will stimulate a total of $15 billion in new economic output to the region over the life of the mine, including average of 2,100 jobs annually with an average income of $59,000. In addition, copper is an essential mineral in creating a green economy from wind power to hybrid vehicles to modern electrical grids and homes.

Liberty Star Uranium and Metals Corporation also provides an example how a small exploration and mining company could rapidly produce thousands of new jobs that would exploit US of gold, copper, molybdenum and uranium reserves potentially worth several trillion dollars.

Liberty Star is a small, publically-traded (LBSR: OTCBB, LBVN: Frankfurt), exploration and mining company with a 10 year history.  Liberty Star Holds hundreds of square miles of copper, gold and uranium claims in Arizona and Alaska.  In addition to its 431 uranium claims in Arizona, Liberty Star holds a very large block of claims in Alaska called Big Chunk, which portends to hold the largest copper/gold reserves in the world.

Most mining companies struggles with environmentalist organizations that oppose any new mining projects as well as government agencies that are unduly influenced by environmentalist lobbying.  However, the power of environmentalist lobbying may be in decline.   State and local governments are beginning to turn to minerals-oriented companies to help solve problems associated with rising unemployment and declining tax revenues.  Environmental protection concerns are often less of a concern for minerals companies as opposed to oil, gas and coal companies that tend to be associated with more controversial issues like emissions pollution that contributes to climate change.  In addition, minerals-oriented companies, like Rosemont and Liberty Star, have made significant advancements in environmentally-friendly mining technologies and processes.

The lack of domestic financing is the second major issue facing mining companies.  Little, if any, of the $12T federal government stimulus and bailout funds reached the mining sector.  Financial institutions, that greatly benefitted from government stimulus funds, prefer large corporations listed on the major stock exchanges as opposed to small and emerging companies listed on the OTCBB (over the counter bulletin board) exchange.   High-net worth investors are scarce due to economic uncertainty and the relative unattractiveness of an over-regulated industry.

Despite the lack of domestic funding, mining companies have found significant interest with foreign investors.  Surprisingly, investors in Asia and the oil-rich Arab Gulf Region see immense financial potential in US minerals, especially copper and gold.  To help exploit this interest, Liberty Star is working with US Citizenship and Immigration Services, a division of the Department of Homeland Security, to establish EB-5 Foreign Investor Regional Centers in Arizona and Alaska to finance scout drilling of target claims as well as conduct engineering, economic feasibility, environmental and socio-economic studies.

In conclusion, mining industries in the US good-producing sector have the potential to create a million new jobs by 2020.  These jobs could be created by a combination of large top-down national initiatives as well as from bottoms-up small and emerging business efforts.  In order to facilitate a major jobs creation mining initiative, government environmental protection agencies need to be more business-friendly in order to enable businesses to be more environmentally-friendly and economically healthy.

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Jobenomics predicts that 2012 will be a pivotal year for the US economy as well as business/jobs creation (see 2012 Jobenomics Outlook article).  Economically, the US is skating on thin ice.  A major or series of minor economic disruptions could shatter this ice and plunge the economy back into recession.   Three potentially large disruptors are:  US national debt problems, meltdown in the Eurozone, and conflict with Iran.

US National Debt Problems.  The US national debt is growing at an alarming rate.  At the beginning of the Clinton Administration the US national debt was $4.1T (trillion).  At the beginning of Bush Administration, it was $5.7T and rapidly grew to $10.0T eight years later due to post-911 conflicts (Iraq and Afghanistan) and implementation of new entitlement programs, like Medicare Part D.  During the first three years of the Obama Administration the national debt increased by almost $5T to $14.8T with a 2011 interest payment of $205 billion.  According to the Obama Administration’s FY2012 Budget, over the next ten years, the US national debt is projected to grow by almost $10T to $24.2T with a projected annual interest payment of $928 billion.

The Congressional Budget Office estimates the total US national debt to be $27.6T by 2021, an increase of almost $13T.

From a Jobenomics perspective, $24.2T or $27.6T by 2021 could be conservative numbers if the economy does not recover or if tax rates are cut in an effort to stimulate the economy.  Assuming that US federal government tax revenues grow at 2.5% per year (which is the percentage that the US economy is currently growing) and planned government expenditures continue, the US national debt will reach a whopping $32.6T by 2021.  Jobenomics calculations are shown below.  Considering that the decade of ‘00s (2000 to 2009) lost one million jobs that were tax revenue producers, a 2.5% growth rate could be considered a conservative number as well.

To understand how significant debt and deficits are, a snapshot of the President’s planned FY2012 outlays and revenues paints a vivid picture.  The total US deficit is estimated at -$1.164T for FY2012 (it was -$1.293 in FY2010 and -$1.597 in FY11).  This year the federal government plans to receive $2.2T in tax revenues and plans to spend (outlay) $2.3T on mandatory spending programs (e.g., Social Security, Medicare, Medicaid, Interest Payments) and $1.4T on National Security and other discretionary government programs.   In other words, mandatory spending of $2.3T for entitlement programs and interest payment will cost more than all the money our government takes in.  Consequently, we will have to borrow an additional $1.2T to defend to run government and pay for national security.

Unless spending is dramatically cut (Tea Party emphasis), or taxes are significantly increased (Occupy Movement emphasis on taxing the top 1%), or tax revenues dramatically increase via a growing economy (Jobenomics emphasis via small, emerging and self-employed business creation), huge annual deficits will continue for the remainder of this decade.  Whether the US national debt is $24T (President), $28T (CBO) or $33T (Jobenomics @ 2.5% revenue growth) is largely academic.  The US economy is likely to collapse under any of these scenarios.

Compared to other grassroots movements, Jobenomics national grassroots effort is small but growing rapidly.    With its focus on middle-class business and job creation, Jobenomics can help bridge the gap of America’s ideological divide regarding US debt spending and receipts.   Jobenomics appeals to the left and right, rich and poor, urban and rural, and members of all political parties.  Small, emerging and self-employed business creation is the only realistic way to increase tax revenue and reduce welfare spending by putting people back to work.

Eurozone Meltdown?   The global financial community is watching the PIGS, which is a derogatory acronym for Portugal, Italy, Greece and Spain.  All of these countries are in financial turmoil.  All are in recession.  All have serious debt issues and are considering bankruptcy and strategic defaults as ways to escape their debt burden.  Moreover, the PIGS are threatening the financial stability of the entire European Union (EU), which is bifurcating into have nations (France, Germany, UK) nations that have stable economies, and have-not nations (PIGS) that are skating near the edge of financial abyss.

Like any family, financial issues generally bring out the worst in people.  This is no exception in the 27-nation European Union where 17 nations share the euro as a common currency.  Traditional rivalries, like those between Germany and France, as well as Eastern and Western Europe are beginning to intensify as financial difficulties continue to worsen with the PIGS.  While the PIGS are in the worst trouble, they are not unique.  Thirteen of the 27 EU members face debts equal to more than 60% of their GDP, the limit set by the European Commission.

There is mounting concern that Greece will be unable to finance a budget deficit, which is more than four times the EU’s debt limit, or make payments on its sovereign debt.  A Greek default has far-reaching financial and political implications for the EU, which by charter constitutes a single market.  If one part of its market is allowed to fail, what does that mean for the viability of the entire market?  The term that most economists and policymakers use is “contagion.”  They are as much concerned about the Greek contagion spreading as the Greek crisis itself.

Many fear that the Greek contagion will spread to Portugal, Spain and Italy whose credit ratings are also falling.  If this continues, financial institution and investors will be unwilling to continue to fund these countries.  Without the ability to sell bonds or borrow money, these countries will default on their debts and sovereign obligations.  Default will put significant pressure on European banks that own securities from these countries.  The European Central Bank (the EU equivalent of the US Fed) controls the monetary policy of the Eurozone member states.  It is also the major source of funding for countries like Greece, and could face major losses on its own loan portfolio if Greek banks fail and the government defaults.

There is significant evidence that the Greek contagion is spreading.  On 13 Jan 2012, the S&P Credit Rating agency downgraded 9 of the 17 Eurozone countries.  France and Austria lost their coveted AAA ratings, which were lowered one notch to AA+, and Italy and Spain had their ratings cut by two notches. Germany, Finland, Luxembourg and the Netherlands all retained their AAA status, while the ratings of Portugal and Cyprus were cut to junk, thereby joining Greece which is one notch away from default.

A Eurozone meltdown or a PIGS contagion will not only spread throughout the EU, but will engulf US public and private financial institutions that are heavily invested in Europe.  No other economic relationship in the world is as integrated as the transatlantic EU/US economies.  The EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows.  The transatlantic relationship also defines the shape of the global economy.   Consequently if Europe plunges into recession, it will likely pull the US back into recession as well.

Conflict with the Islamic Republic of Iran .  Of all the military and terrorist threats facing the US, war with Iran has the most menacing consequences from both security and economic standpoints.  A detailed presentation, entitled Conflict with the Islamic Republic of Iran, was written by this author in 1996, and reviewed by the Joint Chiefs of Staff and the leading military war colleges.  A downloadable copy can be obtained at by clicking: Conflict with the Islamic Republic of Iran. 

Jobenomics, the book published in 2010, has the following information about a conflict with Iran and its economic disruptive potential.

Iran is provoking a conflict with the West, using American and Israeli occupation in the Middle East as the cause célèbre for Islamic common cause.  However, there are more fundamental reasons motivating the Ayatollahs and the leaders of the Islamic Republic of Iran.  These reasons include:

1. Political:  Supreme Leader Ali Khamenei and President Mahmoud Ahmadinejad repeatedly state that their primary political objective is to revive the crumbling Islamic Revolution.  An external enemy helps advance the ultra-conservative position over reformers and youth who want détente with the West.
2. Economic:  Control of 50% of the world’s oil reserves greatly benefits Iran.  Increasing economic sanctions will either motivate Iranian leaders towards moderation or encourage aggressiveness.
3. Military:  Compared to a hundred thousand US forces and diplomats in neighboring Iraq and Afghanistan, the Islamic Republic has several million combat personnel strategically positioned to dominate the region.  Additionally, they openly state their right to develop a nuclear capability.
4. Religious:  Messianically-inclined Shia leaders are preparing for confrontation with Israel and America, the expected near-term return of the Islamic messiah, and the establishment of a global Caliphate.
5. Historical:  Confederacy with Shiite communities throughout the Middle-East (starting with Iraq, Bahrain, and Saudi Arabia) is a historic opportunity after 1,000 years of domination from Sunni Arabs and Ottoman Turks.

The Iranian leaders have repeatedly stated that war with the West is inevitable.  Iran is currently engaged in a war of words and saber rattling.  When they achieve nuclear weapons capability, their rhetoric may turn to military action, especially if they feel that they are about to be attacked by Israel and Israel’s Western allies.

Military planners foresee three possible engagement scenarios: closing the Strait of Hormuz, military action against Israel, and military action against America either at home (terrorist attack) or abroad.

1. Strait of Hormuz.  Closing the Strait of Hormuz would create a global energy and economic crisis.  The Strait of Hormuz is of great strategic importance.  It is the only sea route through which oil from Kuwait, Iraq, Iran, Saudi Arabia, Bahrain, Qatar, and the United Arab Emirates, can be transported to the rest of the world.  Approximately 20% of the world’s oil supplies transit the narrow Strait of Hormuz.   The strait at its narrowest is 21 miles wide with two 1-mile wide channels for marine traffic.  Iran has conducted several major naval exercises to showcase its capability to close the Strait of Hormuz and Supreme Leader Ali Khamenei has publicly stated that Iran will close the Strait if provoked.  If the Strait is closed, the price of oil could quadruple overnight.  More importantly, the disruption of the flow of oil would quickly impact the economies of numerous nations.
2. Military action against Israel.  President Ahmadinejad has stated on numerous occasions that Iran intends to “wipe Israel off the map,” “very soon,” with a single decisive blow.  Preemptive military action against Israel would likely entail a coordinated missile attack, including 40,000 short-range rockets (Katyusha), hundreds of medium-range missiles (Scud) and a few nuclear-tipped theater ballistic missiles (Shehab).  Israeli leadership takes these threats seriously and is considering preemptive military action of its own, which could include the use of nuclear weapons.  The use of nuclear weapons by either side, or military intervention by the US or Israel to destroy Iranian nuclear development sites, would have major consequences in the global political/economic balance-of-power.  It is hard to foresee any outcome that would benefit the US economically or otherwise.
3. Military action against America at home or abroad.  As a result of the 1980-1988 Iran-Iraq War, the longest conventional war in the 20th Century, the Iranian military has maintained the bulk of their 32 divisions and 87 brigades, most of which are stationed on the Iraqi border.  Several million Iranian troops, along with Iranian special operation forces (Qods) already in Iraq, could quickly overwhelm the fledgling democracy Iraq.  Any such action would precipitate a major military response from the US.  To counter this response, the Iranians would likely create diversionary or retaliatory attacks within the US.  The types of terrorist actions that they could inflict within the US have been the subject of much conjecture and study.  The most serious types of attacks would cause massive loss of life and devastating economic impact.  To accomplish an Iranian version of shock-and-awe, bio-terrorism, dirty bombs, or an offshore EMP explosion would be the most devastating.  According to the US Commission to Assess the Threat to the US from Electromagnetic Pulse (EMP),  “Because of the ubiquitous dependence of US society on the electrical power system, its vulnerability to an EMP attack, coupled with the EMP’s particular damage mechanisms, creates the possibility of long-term, catastrophic consequences.”

From a strategic perspective, Iran is the lynchpin in a larger strategic equation that involves both Russia and China, both of which support Iran politically, militarily and economically.  If Iran is successful in establishing itself as the dominant regional power in the Middle East, the global geo-political center would shift increasingly from the West to the East.

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