The Guest Blog

Johnson: All Job Growth is Local

Ivory Johnson |Scarborough Capital Management, Inc

It would appear that capitalism has a developed a terrible dependency issue, turning hostile and violent when there’s nothing left in the punch bowl. Unfortunately, new fears of a double dip recession have emerged, the caked residue of weak economic growth and a soft job market. On the heels of a 30-year spending spree and the party of our lifetime, we find ourselves searching for our equilibrium once again.

If consumer spending represents 70 percent of GDP, most would agree that our economy needs the middle class to pollinate economic growth. Wealth in America, however, has become more concentrated, as corporate earnings have surgedby 200 percent since 1990, while wage growth has increased by just two percent during the same time frame.

There was a time when the carburetor repairman had time to recalibrate his skill sets to accommodate fuel injectors, but with the advent of technology and a global economy, workers can lose their job one day and find themselves obsolete the next. Even white-collar employees, once exempt from the perils of progress, have become autoworkers in sheep’s clothing, and much to their chagrin, the wool suits are starting to itch.

It’s easy to identify the problems, but solutions take real effort. Over the last 15 years, 64 percent of all new jobs were created by small businesses, yet large corporations have marginalized their local competition with greater economies to scale. Despite pleas for a White House plan, the federal government is ill equipped to accelerate job growth, leaving municipalities to fend for themselves.

In response, local governments have been converting data they’re required to collect into formats that developers can manipulate in an effort to monetize information. Hopefully, this will pave the way for small companies like Voxeo to provide platforms that help regional programmers deliver train schedulesand news of fresh vegetable deliveries on iPhone apps, generating revenue for local merchants that otherwise wouldn’t exist.

Lester Lefkowitz | Stone | Getty Images

Much of the discussion on budget deficits focus on Washington, DC, although the states are scrambling to make ends meet. Tele-Works, another small company based in Blacksburg, VA, automates the notification of scheduled utility service disruptions due to late payments. Instead of sending three reminders and paying somebody to shut the water off, residents can receive a series of automatic text messages and phone calls that offer various payment methods.

Just as government carves out contracted business opportunities for minority and female owned firms, regulations can demand that small businesses play an increasing role in these new industries. The manner in which information is dispensed to the public could facilitate synthetic enterprise zones, subsidizing advertising campaigns for neighborhood businesses on text messages and smart phone applications.

The public doesn't understand how light rail technology might imitate Eisenhower's interstate highway initiative that created commerce through the low cost movement of products to previously inaccessible markets. Smart utility grids that allow homeowners to plug their electric vehicles in at night during off-peak hours and pay less per kilowatt, only to sell some of the energy back to the grid at higher prices during the day might create jobs for electricians and autoworkers, but it doesn't quite fit on a bumper sticker.

Thomas Friedman wrote in “Hot, Flat and Crowded” that we need to create something people don’t know they want yet. Extending the social security tax holiday and the idea of rebuilding schools deserve careful consideration, it just won't get anyone excited enough to actually implement a rehashed plan.

Civic minded developers and local firms, more familiar with their native landscape than corporate giants, might not only increase tax revenue and hire workers, but will likely have greater insights that translate into a better product. I remember buying baseball gloves at G&S Sporting Goods on Essex Street as a child, one of the many neighborhood stores whose owners lived amongst us. Well, lucky for us there might just be an app for that too.

Ivory Johnson is the director of financial planning at Scarborough Capital Management, Inc. He is a Certified Financial Planner, a Chartered Financial Consultant and a frequent guest on CNBC. Mr. Johnson attended Penn State University, where he received a Bachelor of Science degree in finance.