You may have read this week that Ford will be laying off upwards of 25,000 people over the next several years, and GM made a similar announcement last November. This is a good time to take stock as to what a job is and why these actions should not be seen as a “loss” of jobs.
Counterintuitive, no? Plainly contradicted by the facts, yes?
The determinant of the number of people working in the auto industry is the size and condition of the industry itself, and not of any particular company.
The definition of a job is “work to be done”. The larger and healthier the industry, the more work there is to be done, and thus, more workers employed to do it.
The definition of a job is not, “a position at Ford/GM/[insert company name]”.
The truth is, these 25,000 jobs left Ford some time ago. Many consumers decided that they would rather buy cars from Toyota. Toyota grows, and hires Americans. Consequently, there is more work to be done at Toyota and less to be done at Ford.
Of course, the job loss at Ford will be difficult for many people, no doubt, and this becomes the focus of the story. For the country, this is a change, not a loss.
Evidence? The US has created nearly 5 million jobs and $12 trillion in wealth in the last five years, which would have been impossible without of the flexibility of our job market.
We must realize that the freedom to hire and the freedom to fire are the same thing. In a growing economy, every loss at Ford is more than equaled by a gain somewhere else. It’s not a happy story for everybody, but the winners outnumber the losers by around 5,000,000.
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