D-I-Y hurting job creation and economic growth?
By AidaLily
@AidaLily (1450)
United States
March 28, 2013 11:43am CST
Now this is a political discussion in the essence it is speaking of the American economy, however... this is not a partisan discussion meaning the government will be taken as a whole and posts about how so and so did this and so and so did that will be redirected in any replies to reflect the government as a whole and not two parties or individuals. I am not interested in playing the blame game. This is a bit long as well. Let's try to have a calm civil conversation please. Thank you.
Do you think entrepreneurship in the U.S. actually hurts the economy more than helps it?
With more people opening their own small business, the less there is a demand for services from mid to big businesses. Do-it-yourself instructions decreases that demand even more.
As an example, you need some small repairs done on your home like fixing a leaky faucet and some paint work. You could go with the big advertised company that will charge you, lets say, $700 which in turn would go into the company to pay for the work and possibly other operating systems. You could call a handyman who may charge you $400 for the work. Or you can decide to get a deal on paint from a local or chain store, some tools and do it yourself for half of that. This just took $700 out of business A and $400 out of the smaller handyman business.
This goes for almost any profession minus such things like surgery obviously but you can get tests for many different things at the pharmacy which can take away some of the jobs of nursing assistants and medical lab technicians.
Now for small businesses - I will use my profession and one other one to showcase how this might hurt other business.
I am working on my getting my associates then bachelors in accounting since for most major firms you need one of the degrees, even if you know how to do the work and understand the laws, for certain certifications just like any profession it seems nowadays adding to student debt but that is another topic.
I run a small accounting business. I charge $10/hr (for basic services like budgets, etc.) and have package deals which can be closer to $200-$300 like setting up QuickBooks for use by a small business and doing a month's worth of bookkeeping added to that. Tax courses by tax firms such as HR Block, Jackson Hewitt, and others make is quite easy to refresh on old tax laws, learn new tax laws, and fill out the appropriate paperwork.
Most accountants would charge a lot more for that work ranging usually from $25 to $150 an hour and sometimes higher. A smaller business willing to do it for less takes money from firms who may have hundreds of employees for a smaller one that has up to ten employees. There are also DIY simplified websites for people to manage finances as well which take money from both the firm and me.
Another small business is retail and I mean people selling clothes or more with their own little shops on various sites like ebay, amazon, etsy, etc. You have bigger stores who usually have to sell some of these items for $5 or more dollars and then you have someone online who will sell it for much cheaper and sometimes with free shipping or extras. This does take money out of brick and mortar stores and may end up with more job losses because of it.
Need legal advice? You can usually pay one of those sites with experts a lot less to answer a simple question or just google it.
Need to compare banks and loans? Besides sites like Bankrate, there are templates you can use to compare different loan options using Microsoft Excel.
Are you sick and know what is wrong? You can just go get many prescriptions over the counter without needing to go to your doctor. I believe my friend who is studying for her BSN mentioned that they were developing or thinking about developing an at-home STD or AIDs test. I am not sure which.
Want a website built? With free websites, easy to follow tutorials and freelancers willing to do it for pretty much pennies on the dollar, it is pretty easy to do it yourself.
Want to see a movie? I know more people renting from redbox for a night than going out to movies and more which takes away from other businesses since no employee is really needed to operate it.
Do you think our government should make it harder to start a business or figure out how to regulate smaller businesses more in order to try and slow down the DIY mentality to help the economy and job creation? With the number of unemployed people and those who want to start their own businesses, should bigger businesses try to be more aggressive tactics to prove why spending $700 for the same services that could be done for $200 on a day off much better? If everyone can pretty much do it themselves (like growing and making your own spices) then do you feel as though there wont be much of a need for businesses some day and that the economy will slow even further due to it? Is our government not doing enough to push for job creation so that more people are going towards creating their own businesses and doing their own projects? Do you think that the U.S. is advancing too much into a DIY country with the amount of technological advances, etc.?
5 responses
@OpinionatedLady (5965)
• United States
30 Mar 13
Although I see how DIY'ers like myself could hurt other small business to a point, I would say no. I save a lot of money doing things for myself, because I do I have the money to go out once in a while to dinner or to buy that extra outfit for one of my kids. As for big business being hurt let me give an example of the before mentioned clothing. A big store such as Bon Ton or Macy's generally sell sweaters for $50. After season the price drops 50%. The next season it is being sold for under $5. I know I buy off those racks all the time, anyway the store sell still to make a profit. If they are making a profit at $5 think of coarse on the profit back when it was in season... If small business and DIY folks are competition then they can adjust, such is the way of business.
@OpinionatedLady (5965)
• United States
1 Apr 13
The thing DIY folks are not new competition. In fact it was the people who don't do DIY that made those businesses come about. Back in the day everyone did for themselves it was the rare or very rich person who didn't. Those people are the ones who supply the businesses. I know in our day and age that many more people do not have the skill set or don't want to. There are still plenty of theses people to supply the jobs. It then brings in the point that those who do the best jobs will rise to the top.
@crossbones27 (49432)
• Mojave, California
2 Apr 13
I just do not get how we have more people going to college or trade schools than ever before but yet people still do not have the skill set. Something is not adding up there. Either people are not getting taught right or businesses are expecting to much from people right out the gate. Of course when the job market has so much competition this is what happens. So maybe there is the answer right there to Adia's question. We need more entrepreneurship because the competition to get work in some places is ridiculous.
@AidaLily (1450)
• United States
31 Mar 13
They could adjust to try and make things more attractive for consumers but usually not without dropping their prices. A lot of people do buy clothing out of season, I know I do. It is much cheaper to get a new swimsuit in fall/winter than it is in spring/summer. I also tend to make my own cleaning products and I can actually do flooring as I learned how to. I'd say do my own taxes and such, but as that is part of my profession I can't really count that.
I am not sure if they would be making a profit. It would depend on how much they purchased the sweaters for, how much they were able to sell the sweaters for, and if they had been at least able to break even since they need to before making a profit. If they bought $10,000 then they would have to sell $10,000 before making a profit on what is left. It was something I learned while in school because I had always thought they made a profit from marking it up since they most likely purchased it for a lower price than I am paying.
I was more speaking of DIY hurting service industry businesses like professional painters, home repair (depending on what it is), and so on. If you are willing to work on your car by yourself because you have the knowledge to do so or have a helpful family member, then it is hard for a car shop to keep up with that.
@sierras236 (2739)
• United States
28 Mar 13
The answer to your question is no.
BTW you really should be thinking about charging higher prices for the amount of work you do. Like every business, you want to get what your time is worth not give away your services for less than what you are worth.
All of those big businesses were small business at one point in their history. Take Apple for example, they started out in a garage.
@AidaLily (1450)
• United States
28 Mar 13
I know I should charge more. The work that I do is definitely priced a lot higher than I am essentially selling it for. I almost think I am too nice to run my own business. Setting up accounting software for people definitely takes a lot of work since you have to add in so much information and I help fill out tax forms and business forms when I do it as well so they are completely set. For some people, I've even taken them through learning what everything means and where they can find it. One job I did with all of that work put in, I charged the person $150 plus 3% for that portable card swiping device for about a week's worth of work once everything was done and settled.
I find myself thinking of being in a catch 22 of sorts because I have business because I charge less than those other guys, but at the same time it is a lot of work for very little pay in the long run which doesn't make it feel worth it all the time.
It is true that all of those big businesses were small businesses at one point. I am just curious if it hurts employees even more when people create smaller businesses and/or do things themselves. If the businesses aren't getting a lot of money, then they have to cut employee hours and more to make sure they can still operate. That was my thinking on it.
@sierras236 (2739)
• United States
28 Mar 13
It's almost double-edge sword. The people who do things themselves are saving money. So, while they are saving on say a service, they may be spending that savings in the retail/sales market. In other words, that savings goes toward purchasing more stuff. While you might have a drop in the service aspect, you will see an increase in another part of the market.
It really doesn't hurt employees that much because they often have a harder job and more expensive job after the DIY attempt fails which happens about 80% of the time. Odds go up as the project gets more complex. Plus, there are some jobs that should never be attempted by a DIY such as messing with a home's electrical system.
@AidaLily (1450)
• United States
29 Mar 13
I never really looked at it like that. There are some people who will read completely up on something in order to save money, but others will just look for the quickest answer and end up messing things up.
You might be surprised how many people try DIY with electrical and plumbing. I have no issues with people doing it if they know what they are doing, but they end up causing problems when they don't.
I can see how it would be almost a double edged sword. The money does shift from one market to the other but it seems like some service based businesses still feel the heat like a professional painting business who removes and repaints places and jobs of that nature.
@bobmnu (8157)
• United States
29 Mar 13
Most people will spend what they can afford. If I am going to paint my house I can not afford to pay a professional painter $25 to $50 per hour to paint my house so I buy the paint and do it myself. If I did not Do it myself the store owner would not have my business. The money is not lost, it is just being spent in different places for different things.
@AidaLily (1450)
• United States
31 Mar 13
This is true. Most people wont spend more than they can afford, but one thing I have thought of about the money transferring is 'what if the company also purchases from the store owner for projects?'. At that point it is just cutting out the middle man and thus could hurt the employees who have to wait for someone to hopefully not want to do it themselves.
Now that being said, I would probably paint my own house mainly because I don't like having more people in my home than I actually need considering I don't really trust anyone.
A good point was brought up above though about how these businesses may make even more money when a person inevitably screws up their DIY project like some of the people I know who fixed their roof on their house by themselves.
@andy77e (5156)
• United States
30 Mar 13
Oh no no. Not at all. In fact, it is exactly because we have a DIY culture, and entrepreneurship that allows us to grow.
Preventing that, like say pre-1978 China, is exactly what led China to become a 3rd world country, where people live in mud huts, and eat one cup of rice a day.
There are a number of reasons for this.
First, there are different customers and different requirements, for different size companies.
Take for example my last job at a manufacturing company. We purchased circuit boards from another company that prints the boards. We changed suppliers, and I was lucky enough to ask the manager why we did that.
The reason is we contracted with a small local company. But over time, the company grew into a big company. As the company got big, they got big contracts for 10,000 to 100,000 boards, while our contract was small, only 500 boards a year.
When the company gets large with large contracts, the natural priority is to the multi-million dollar contracts with large customers over small thousand dollar contracts with small customer.
Over time, we start getting delayed shipments and late service. So we hunt around for another small printed board supplier. My company had done this before.
Small start up companies fill a gap that large massive companies are not able to fill, catering to small customers.
Large companies are geared towards large customers.
You'll see the same thing with banks. You have a small community bank, and they have amazing service, and you can talk with the bank manager at any time. But over time, the bank grows, and gets larger, and in 20 years, it's a national bank across the country.
You get more perks, like being able to walk into a branch in Montana, when you are from Florida, and they normally have other nifty services like an ATM at every shopping mall. But now the service is poor, and the bank manager is in another state, and you are treated like a number, at the teller window with a teenage high school students.
Some want those perks. Others want the personal service.
Having both the small business, and the large business is a benefit to the economy. They fit different situations, and different customer types.
I remember talking to a manager at a fast food joint, about how they ordered potatoes. They had two suppliers. One was a large firm, that had piss poor service, but the price was lower. Another had great service, but the price was high.
They setup the large firm to have regular scheduled delivery. When they had a run on potatoes, like their stock of potatoes got usually low from abnormally high business, they would order from the smaller company that provided great service.
Each company, the large and the small, filled a specific gap in service.
So no, this idea that small business, and DIY is bad, just doesn't wash. And further, most innovation comes from small business.
When you have protected large companies, they never have a reason to find new ways of doing something. New ways to reduce cost, or new ways to improve quality.
It's only because anyone anywhere can open a business, that other companies are forced into advancing.
@AidaLily (1450)
• United States
31 Mar 13
To be fair, I've never seen a bank teller who was a high school student but most of the banks if they hire here want you to have at least an associates degree or so much experience, but I understand what you are saying about bigger banks after a while.
My thought on the DIY stuff, admittedly not stated well, was that it would take away from the employees if people started doing things themselves rather than hiring professionals. The businesses might not be able to pay their employees as much if everyone is just doing things themselves.
For example, an oil change that someone might pay a car technician $60 for, they may decide that is too much and could do it themselves for $25. Now the Auto store they bought their oil from is $25 richer, but the car technician who might get 50% on every thing they do and that business now has lost that customer. You could have your fluids and tire pressure checked but it is nothing you can't do at a local gas station around here if you have the time.
Due to more people fixing their own cars and such in my area, the local auto shop closed down. Instead people head over to the auto parts store, spend decidedly less than they would in a shop, and either they can work on the car or they can follow directions and fix up their cars. Now the guy at the local store does some freelance work and a few of the employees had to go to other jobs since it closed down. The owner also owned a small bakery and so he is still doing alright.
It is those types of things that make me wonder if DIY is a bad thing for business overall.
@andy77e (5156)
• United States
31 Mar 13
Ah, ok.
In this case you are just moving employment around. The oil change company has less business, and lays a few workers off. The auto part store has more workers, and hires more cashiers to handle the load.
That said, I get your point. Like eating at home. Eating out every day at a restaurant gains tons of employment, and new food service businesses.
If you learn to cook, you will reduce food service business, and the local store closes. In economics, this is referred to as the 'paradox of thrift'.
If everyone in the economy saved all their money, the economy would completely crash.
The problem with that concept is what happened in 2008. People spent all their money and spent all their money, until they were bankrupt, and when a high enough portion of the public went broke, the economy crash.
Yes, the auto shop business is worse off, but all the people that saved money from doing their own work, they are better off. They now have more money than they would otherwise, to spend on bills, or education, or buying equipment and tools, or starting their own business themselves, or whatever.
That in itself is a benefit to the economy. When you as an individual or more fiscally stable, because you saved money on car repairs, or fixing food at home, you being stable is a benefit to the economy in the long run.
It is a horribly complicated subject, is it not? Fun topic though!
@crossbones27 (49432)
• Mojave, California
28 Mar 13
You have some interesting points, I just wrote a whole spiel but I forgot I was not signed in and lost it all. So I am just going to keep this short and to the point. I am sure we could approve on the current system a thousand times better than what it is right now. The problem is many people just simply do not care if people can find work or not. As long as their pockets are filled, that's all they care about. So people are forced to start their own DIY business or live in the street.
Plus DIY businesses always pick up on recessions. It will probably settle down when things stable out. I am sure it hurts many businesses with all these new people taking a way from their business. The way I look at it is. These businesses deserve what they get if they want to ship our jobs overseas, overwork and underpay us, then simply make it so hard to get jobs that should not be that hard to get. Of course many companies are making record profits so I do not think many our worried about all these DIY businesses
If we really wanted a max efficient economy we would learn how to utilize
as many people as possible in the work force. If they would do that it is said we could only work 6 hours a day and 4 days a week. It will probably never happen though because people care to much about money in this country. I think even if people disagree with your question. I am glad you brought up this point even if many people are going to disagree.. It challenges are current system into becoming better than what it is.
There is some interesting ideas out their though, about the way our country should move forward. This one right here, is my absolute favorite. I just think our country is to greedy to switch to this way of thinking.
http://www.ted.com/talks/graham_hill_less_stuff_more_happiness.html
@AidaLily (1450)
• United States
28 Mar 13
I don't think many businesses are worried but their employees might be. This is just my opinion, but the more things people are willing to do on their stuff the less skilled workers would be needed for such things as household repairs, computer repairs, accounting, and much much more. If a business has a department for these sorts of things, they might consider downsizing because they no longer need them since more people are just doing it themselves.
It makes sense that they always pick up on recessions and hopefully it does settle down more when things stable out. The bigger businesses who can afford to ship jobs overseas do deserve it as they are already taking jobs out of the economy, but the smaller business like the local handyman do not deserve that.
Of course some professions don't have to worry about this because I doubt anyone can diagnose themselves, would want to drive their own trash to a garbage dump, and so on.
That was an interesting link. I might check out more of his message later on.