In a presidential election year, there is a lot of chatter about the roles of government bodies that determine national fiscal policies. Moreover, there are often spirited debates about how to get the economy revved up and what the keys are to creating jobs and tamping down the unemployment rate until it begins to reverse itself. This brief article is an attempt to cut through all of the fog and share a few verifiable facts that should help in the debate of government vs. small business as engines of economic growth.
#1: At least 150,000 jobs need to be created each month just to keep pace with population growth
So, no matter how you hear job figures spun, remember that any number under 150,000 is not getting it done, so alternative approaches need to be tried.
#2: Small businesses create between 60% and 70% of all new jobs; they also employ more than half of the U.S. workforce
This fact has several implications, among them:
- Small business are the primary source of new job creation
- The key to new job creation should be helping these small businesses to do their jobs even better, which will lead to greater job creation
- Another key to new job creation would be to foster the creation of more small businesses, which re job creation machines
#3: Small business owners fear making long-term plans, which bogs down the entire economy
Small business owners that testify before Congress consistently say that they don’t know what their tax rates and regulatory costs will be in the future, so they make fewer long-term plans and invest less than they normally would in people and equipment. Small business owners are also mortified by rising health care costs and increased red tape that seem to be annual events now.
#4: The federal government not only stalls small businesses through taxes and regulations, it awards an ever-declining number of contracts to small businesses
No matter what a given administration’s spokespeople are saying about how it feels about small businesses, the proof is in the pudding. Federal agencies are awarding fewer and fewer contracts to small businesses, falling short of small business owners’ preferred goal of 23% of all such contracts for six straight years. Bills intended to reverse this trend remain stalled in Congress.
#5: The new healthcare law upheld by the Supreme Court is seen as a burden by small business owners
All compassionate Americans want health care coverage to be a possibility for everyone in our country, but there are many ways to accomplish that. Increasing the squeeze on small businesses through even higher health care costs is a win-lose proposition. Through creative thinking and policy, it is possible to make health care available to all without throwing a wrench into our economic growth machines—small businesses.
It’s true that government can create jobs. Any trip around the Washington beltway will enable one to see office building after office building erected in recent years as government contracting has run amok and more federal agencies have grown. The D.C. area is doing fairly well, but at what cost?
It’s one thing to create jobs while you run a massive debt; it’s another to let the traditional incubator of job growth—small business—to do its thing year after year and churn out jobs without increasing our national debt. The old joke is funny but true: if small businesses ran themselves as the government does, they would be bankrupt in a very short period of time. That’s because businessmen know how to run businesses. Politicians know how to run a government. The elected officials in Washington should not be looked to as the primary job creators in any sound economy.
As Dick Morris so aptly points out in his well regarded book ‘screwed‘ It’s time for the government to govern in a way that liberates small business owners all across the country to do what they do best—business. Job growth will inevitably follow, as small businesses are given time to grow and prosper, freed of the shackles of high taxes, regulations and skyrocketing health care costs.
America shows how it values farmers every year with numerous farmer-friendly policies (a debate for another time). It’s time that the U.S. show at least as much love for the backbone of the economy: the small business owner.