important questions: Which
companies really do create
jobs? What can be done to
enhance their ability to survive and prosper? And how
can we get more of them?
The search for answers to
all three begins with one
JACK S TACK is the co-founder and CEO of SRC Holdings, a remanufacturer
of engines and engine components, in Springfield, Missouri.
You plan to hire 1,000 people in the next five years.
What’s the greatest obstacle to doing it?
Getting the people we recruit to understand our compensation system. Our system allows us to be competitive in our
pricing. Employees can do as well here as anywhere else, but
they have to accept that a portion of their pay will depend on
the company’s performance. A lot of people want to be paid
the whole amount up front, regardless of how well we do.
What role, positive or negative, does the government play in your business?
Some of the things the government does make it harder
for us to be competitive. I analyzed our standard costs and
found 24 items included in our cost structure that we don’t
have in the cost structure of the products we make in
Indonesia. Those 24 items are due to government mandates.
Some of them are little things—notices we have to put on
bulletin boards, for example. But they add up.
What’s your biggest concern right now?
Uncertainty about the future. We currently have $10 million
of debt that we don’t need, and the money is sitting in a
bank account. We borrowed it because we’re scared of
what might happen in the next year or two.
A LITTLE HISTORY is in order
here. For most of the 20th
century, everyone believed
that big companies created
almost all new jobs. Then, in
the late 1970s, a researcher at
the Massachusetts Institute of
Technology named David L.
Birch made a remarkable
discovery. Working at MIT’s
Center for Urban Studies,
he had developed a particular
interest in jobs—how they
were created, why they moved
from place to place, what role
they played in regional development. The government
databases weren’t much help
in his research, given that they
didn’t break out employment
at individual companies and
therefore didn’t allow him to
track changes in the numbers
and locations of jobs over
time. So he hit on the idea of
using data from Dun & Bradstreet, which recorded the job
numbers and locations of specific companies and establishments in preparing its annual
credit reports. Birch got ahold
of the complete D&B files for
four years—1969, 1972, 1974,
and 1976. When he examined
the data, he was surprised to
find that, in that eight-year
period, businesses with fewer
than 20 workers created four
times as many new jobs as did
companies with more than
In 1979, Birch published
the results of his research in a