How America can create jobs
The nation's entrepreneurial prowess may be the best hope to stem 9.7 percent unemployment. Companies from a laser-tech firm to a baby-sitting network are harnessing new ideas – and helping reinvent the economy.
If America is going to mount a solid recovery in jobs coming out of its deep recession, much of the fuel will come from people like Valentin Gapontsev, a Russian immigrant with a thick accent and a knack for turning beams of light into cash.Skip to next paragraph
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The company he heads isn't on the Fortune 500 list. It isn't located in a fancy mirror-skinned office building in downtown Boston. Instead, it resides down a blink-and-you'll-miss-it rural driveway, in a modest building where workers perform their tasks in white lab coats.
Yet the firm he founded, IPG Photonics, is putting this quiet community at the forefront of 21st-century laser technology. A decade after the IPG facility opened its doors in Oxford, Mass., nearly 400 people are now employed making equipment that manufacturers use for drilling, cutting, and welding metal parts – everything from car roofs to jet-engine combustors.
"Our target within 10 years is to triple our business, minimum," says Mr. Gapontsev, as he gazes from a conference room at the snow-gauzed woods outside.
Can you bottle what Valentin Gapontsev does? Is he one of a kind, or are there millions of Americans still out there whose skill, passion, and belief in the future has survived the worst battering since the bread lines of the 1930s?
Just saving American business from catastrophe was a heroic enough task over the past two years. Now, however, the focus has shifted to that one-syllable mantra that is the fundamental building block of economic growth: jobs.
Economists see firms like Gapontsev's – young, innovative, hungry – as crucial to job creation. What IPG Photonics does will have to be replicated exponentially across the country in everything from online start-ups to spade-in-the-ground food operations if the US is to put people back to work and raise living standards.
Innovative entrepreneurialism has always been at the core of America. It may now be the best hope for the return of the country's self-confidence – or at the least, for simply putting Americans back to work.
"We want companies that are going to double in size and growth in the next five years," says Elaine Allen, a professor of entrepreneurship at Babson College near Boston.
The idea isn't lost on President Obama and other policymakers seeking an employment fix. The president has recently been selling a raft of proposals designed to boost both innovation and small-business job creation. Among them:
•A tax credit for new hiring this year, with the benefits targeted especially toward small firms.
•Making the research and experimentation tax credit permanent, to become an $82 billion spur for innovation and investment this decade.
•Enlarging the pool of creative talent and skilled workers by revitalizing community colleges and making college loans more affordable.
Behind these moves lies a simple reality: The economy's net job losses over the past year have stemmed less from people losing their positions than from a sharp slowdown in the usual pace of new hiring – both by start-ups and long-established firms. During the recession, the number of jobs in the United States shrank by more than 8.4 million. The nation now has fewer private sector jobs than it did a decade ago, even though the population has grown by more than 20 million.
With that gaping jobs deficit, Mr. Obama's proposed incentives for bootstrap businesses are at best a partial fix. Many economists worry that the normal growth cycle may be too tepid to bring down the nation's 9.7 percent unemployment rate this year. So the president is pursuing more government aid to households and state governments, to give the economy a demand-side boost. He's also seeking to promote exports and to expand infrastructure spending.