Golden Ratio: Investing in New Jobs

One of the most important aspects of an Economically Responsible venture is its Investment to Jobs ratio. Like any important factor, the Investment to Jobs ratio of a venture requires a certain amount of examination to be properly valued.

Some ventures, such as real estate development, will produce a very high number of jobs per X amount of capital invested; however, the new jobs will be low wage and temporary construction jobs; therefore, the economic effect of the jobs created will be slight and temporary, significantly lowering the economic value of the venture. Ventures which create permanent hourly jobs will have a have a more significant positive economic effect than ventures which create temporary jobs in the same numbers, but less than ventures which create permanent jobs, and should be evaluated as such.

The ideal Economically Responsible venture creates a large number of permanent salaried positions for investment brought in, and is able to both sustain and expand that number with company profits.

For instance, my company – Multi Axis Games – creates 1 salaried position for every $175,000 invested for a total of 75 new salaried positions created during product development. Profits from the product then allow the company to create an additional 35 salaried positions during the first year after the product is released. By the end of the third post product launch year, even with pessimistic sales projections, the initial $13,500,000 investment has created 190 new, permanent, salaried jobs at a ratio of 1 permanent job created for every $71,000 invested.

Those 190 salaried employees are also 190 new middle class consumers, capable of buying houses, raising families, and generally increasing the amount of cash flow in the domestic economy.

Obviously, the Investment to Jobs ratio is an important determiner of a venture’s Economic Value. What are other important factors of an Economically Responsible venture?