Free Enterprise - Principle 9

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Principle 9: Jobs are created when businesses grow or new businesses are created.

football skateboard slide

Most people get their money from working a job. What creates jobs? Jobs are created when an owner expands his business. For example, an owner has a business that makes tables and chairs. He hires three workers and a half time salesperson. Then he decides he also wants to make beds. But his three workers are busy making tables and chairs. He has to hire two more people to make the beds. He hires the salesperson fulltime since they have more items to sell. In this example, two and a half new jobs were created because the owner decided to grow his business.

Look at the drawing. The entrepreneur started by making footballs only. He had success and decided to grow his business. He added skate boards to his inventory. He made more money and hired more workers. Finally he added a line of playground equipment, selling things like sliding boards. Each time he grew his business he created new jobs!

Starting a new business creates jobs too. For example, an entrepreneur starts a clothes factory. He has some money and he gets a bank loan too. He rents a neighbor’s empty building and hires workers to paint it, put in new windows and updates the electrical system. He buys sewing machines and other tools for making clothes. He starts small. He can expand later if the business is successful. He hires a half time person to maintain the machines, the building and to drive the delivery truck. He hires a salesperson who will also keep daily records. He hires four people to work the machines that will turn cloth into clothes. He created five and one half new jobs at this job site.

But it doesn’t stop there. The repairmen had a temporary job doing the painting, electrical work and windows. The entrepreneur helped the sewing machine factory because he bought their product. And the bank had additional work for its people who compile paper work for loans. Growing businesses and creating new businesses creates jobs.


It was Marcella who acted like a cautious banker. Questions, questions, questions! She was determined to make sure Andre and Allen could operate the business successfully. She wanted payments made on time every month until the loan the boys were asking for was paid in full! Finally she was satisfied and stopped asking questions. Andre and Allen felt like they had been asked every question possible. They were tired from answering all her hard questions!

“Don’t get mad at Marcella,” Sabetha said. She is just doing due diligence so our money will be safe in your hands. We want you to be successful—because you know, if you succeed, we succeed too!”

Even though it wasn’t exactly true, Andre tried to give the impression that Marcella’s questions had been no surprise to him.

“Allen and I had already gone over all this. We had figured exactly how we wanted the first year of the business to look.”

Not to be out done, Allen threw in, “I made a complete list of all the items we will need and how much they will cost. Then I allowed for wages to the workers. I even figured in the amount we would pay back to you each month … and calculated our profits too.”

Smiling now, Andre smugly said, “I guess that about handles your questions.”

But Marcella still had one more question!

“Have you thought about how starting your new business will help all the kids here?” She paused. “It really is a service that you, Sabetha and I are doing. Starting new businesses creates jobs!”

“I don’t get it,” Allen confessed. “How will our making money building huts help the others?”

Sabetha chimed in. “Well, to tell the truth, I just want to make money—I haven’t really thought that much about the other kids.”

“Look, the kids need jobs.” Allen and Sabetha still had blank looks on their faces, so Marcella tried to explain some more.

“They have got to have something to do to keep from going crazy with boredom. But more important, they need to earn money, if not with actual money we had with us when we crashed, then something else that acts just like money.”

Activity: Ask your students, “How many of you would like to start a new business?” If some say they would like to, involve the class in deciding how many new jobs it would create. Allow for the temporary jobs that are created in getting the business ready to open its doors; painters, carpenters, inspectors and so on. Help students estimate how many positions will be needed and what each will do. Discuss the new businesses of three or more students and talk about how many jobs each would create.

You may want to assign two or three students to a group and have each group plan a new business and explain how many new jobs it will create.

The students should get the point that if no one grows a business or starts a new business, there will be no new jobs created.

Additional activity: Have students look in newspapers and find articles about new business being created or existing ones growing. Have them write a report, or bring the article to class and discuss it. They can estimate how many new jobs the project will create. They can call the owner/entrepreneur and ask how many jobs will be created. They could also ask what qualifications are needed for the workers they will hire.

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