The Great Debate: Give the States the Power to Build Jobs

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By Muhtar Kent and Ram Charan

The opinions expressed are their own.

While the long-term fundamentals of our economy remain strong, America is struggling to recover from the Great Recession. With unemployment rising to 9.1 percent in May, we need more jobs, and we need them now. The good news is that we can create them by encouraging more small businesses and entrepreneurs to compete and win in the global economy.

Here's the reality today: Two out of three new American jobs are created by companies less than five years old. Small- and medium-size enterprises (SMEs) are powerful -- indeed essential -- engines of economic growth and job creation, not to mention tax revenue.

Unfortunately, not enough SMEs are geared toward competing internationally, despite the vast potential that exists in many global markets.

One of the great, largely untold economic stories of our time is the mutual dependency between America's multinational corporations and small- and medium-size enterprises. Today, large U.S.-based global businesses directly employ 22 million Americans and support more than 41 million additional American jobs through their supply chains. That's nearly one in three American workers.

Ironically, too much of our national discussion about job creation and tax policy separates small businesses from big, public multinationals. Most state governments, which are on the front lines of attracting and retaining key businesses, are better equipped to recognize this mutual dependency and create policies conducive to growth across the board.

Governors can provide invaluable leadership in this regard, given the levers they have to attract investment and connect local companies to overseas markets. And this is about more than states competing for business relocations and expansions. Such initiatives are fine, as far as they go. Instead, we urge each state to make the most of its unique competitive advantages.

One state that has done a good job in this area is Texas, which over the last five years has been responsible for 80 percent of America's new private sector jobs. At a time when some other states have increased taxes, added more government bureaucracy and placed onerous restrictions on development, Texas has created an environment that is decidedly pro-business and pro-global trade.

In fact, small businesses in the Lone Star State accounted for about $70 billion in exports last year, helping Texas continue to lead the nation in export trade -- something the state has done for nine consecutive years.

Other states could enjoy similar success, we believe, by organizing SME global competitiveness councils that tap into the Golden Triangle of business, government and civil society. These councils could include leaders of SMEs, larger companies, unions, area business councils, consulting firms and financial institutions.

We think state competitiveness councils could act as a bridge between SMEs and those with overseas experience, including business consultants and leaders of U.S.-based international companies.

We're also confident that U.S.-based multinationals could help SMEs expand globally. After all, SMEs are key partners of large companies, and most corporate leaders know they can't be successful without their partners succeeding, too. That's one reason The Coca-Cola Company makes a point of introducing our customers and other partners to high-level business contacts worldwide. In addition, SMEs could leverage the expertise of retired large-company executives, many of whom would be willing to help on a voluntary basis.

While the administration and Congress have teamed up on a number of small business tax cuts, Washington may not ultimately be in the best position to fix America's unemployment problem. We believe states can and should take the lead in unleashing the global business potential of our SMEs and entrepreneurs.

Consider this a call to action for state leaders and the public. While we're optimistic about America's economic future and entrust Washington to facilitate job growth, we believe states could do more to create new jobs in the near-term by thinking more strategically, playing to their strengths, organizing global competitiveness councils and helping SMEs flourish at home and abroad. And doing so requires no additional funding or legislation. It's time to get behind our states and small businesses and help them create the kind of future for America that they are uniquely qualified and empowered to build.