In almost every previous recession it has been small businesses that created the job growth that pulled us out of high unemployment.
According to the latest poll of small business owners taken by the NFIB, small businesses are not yet moving into job creation mode.
Over the next three months, 8 percent of small business owners surveyed plan to reduce employment (down 2 points), and 13 percent plan to create new jobs (up 3 points), yielding a seasonally adjusted net negative 1 percent of owners planning to create new jobs, unchanged and still more firms planning to cut jobs than planning to add.
"Net job creation will appear in the coming months, but the gains will be painfully slow with timid consumer spending, especially in the service sector," said William Dunkelberg, NFIB's chief economist.
Owners complained that poor sales are their top problem, and there is no need to hire with no new customers. In this sales environment, it is hard for workers to earn their pay. Owners cannot pay workers more than the value they add to the firm. This is why a jobs tax credit will do little to increase employment. No one can pay $40,000 for a worker to get a $5,000 tax credit unless that worker can add at least $35,000 in revenue to cover the cost of hiring. And as long as the tax credit issue is alive in Congress and not passed, employers that were ready to hire (13 percent plan to hire) will wait until they can qualify for the credit, delaying much needed gains in employment.
More evidence that those shaping our current economic policy are completely out of touch with the realities of owning a growing a small business.
According to the latest poll of small business owners taken by the NFIB, small businesses are not yet moving into job creation mode.
Over the next three months, 8 percent of small business owners surveyed plan to reduce employment (down 2 points), and 13 percent plan to create new jobs (up 3 points), yielding a seasonally adjusted net negative 1 percent of owners planning to create new jobs, unchanged and still more firms planning to cut jobs than planning to add.
"Net job creation will appear in the coming months, but the gains will be painfully slow with timid consumer spending, especially in the service sector," said William Dunkelberg, NFIB's chief economist.
Owners complained that poor sales are their top problem, and there is no need to hire with no new customers. In this sales environment, it is hard for workers to earn their pay. Owners cannot pay workers more than the value they add to the firm. This is why a jobs tax credit will do little to increase employment. No one can pay $40,000 for a worker to get a $5,000 tax credit unless that worker can add at least $35,000 in revenue to cover the cost of hiring. And as long as the tax credit issue is alive in Congress and not passed, employers that were ready to hire (13 percent plan to hire) will wait until they can qualify for the credit, delaying much needed gains in employment.
More evidence that those shaping our current economic policy are completely out of touch with the realities of owning a growing a small business.
we all need to urge small, medium, and large size business to first begin to resume business-to-business spending.
then, jobs will sooner rather than later be created.
Most workers right now are not worth $8 per hour, I will not waste my scarce money hiring them. It takes a minimum of $20 per hour sales increase in order for a retail store to pay $8 per hour.
The writer of this story, is full of it when he thinks sales need to increase only by the wages.
$50 in sales, costs $25 in cost of merchandise purchasing leaving only $25 to pay wages. It is insane democrats that think to pay $20,000 in wages you only need to increase sales $20,000.
If govt wants to create jobs lower minimum wage to $5 per hour for teenagers, college students, those on unemployment, those the work less than 10 hours a week.
I would hire 5 workers at $5 per hour, doing sweeping, cleaning other things that do not require $20 per hour in increased sales to pay for their wages.
The issue is the high risk factor of growing a busines in an environment where Congress won't face economic realities (insane deficit spending), where union government workers are the only group not feeling any pain, and a President who villies (and doesn't understand) capitalism. It's a toxic combination, and as the day of reconing approaches, everyone just wants to hold on to what they have.
What a pile of hooey! Some of us need workers, $5000 will sure help me afford it. I bet these people look down on "lazy welfare people", yet I guess they expect the Feds to pay for a worker full salary. Who wants welfare now?
I am generally for a well done, well conceived job creation program. The problem is with the definition of well conceived -- if it just temporarily lower taxes and adds to the national debt without any offset in reduced spending elsewhere then this is just adding to the national credit card bill and taxes will have to be raised or spending reduced to pay it off in the future.
The hiring credit does not interest me in the least. The orders from our customers have reduced in size, it seems like all orders are expedites. No one is spending a dime more than they are comfortable with. Oh I almost forgot with the new taxes, cap and trade and health care clouds around us, it is hard to get me to take on any more risk than I already have in our business.
If the government spends $1 to keep someone unemployed it cost $1 right? Now if the government gave the $1 to a business that hired that person and they matched a $1 that person would get $2 or maybe $1.33 after taxes. So the way I see it that’s 33% more than just getting $1 to stay unemployed. They would have 33% more to spend into the economy, pay their mortgage, bills. Etc. The government gets .66 cents back or it cost 66% less to have them employed right? The last one month extension cost $10 billion. Now we are talking $120 billion to fund a failing program for one year. If we partnered with business it would only cost $40 billion right? They could run the program for two more years with the $80 billion in savings if needed but I bet we would be under 5% unemployment by then. If we would use the same unemployment funds as a stimulus to employers and fund ½ of a persons wages up to the amount they would have received for being unemployed we would truly encourage reemployment without waiting for tax credits. Few small businesses are in a position to take advantage of or are willing to take the risk to bring on any new employees with the hopes of a future tax credit. Make it simple with no strings attached. Have the county employment office simply cut employers a check each week to help with payroll. If an employer needs someone for a week a month who cares this would provide opportunity not dependency. Isn’t that what we want from our government opportunities? Every day someone is on a payroll it would cost the government (Me and You) 66% less, boost the economy 33% more and cost the employer 50% less to bring someone back to work. This is a four way win Employee’s, Employers, Economy, and Government. How can we lose? Minnesota had a program like this back in the 80’s called MEED when we were coming out of the last recession. Sen. Franken has penned a bill called SEED that comes close but has strings attached. Why should and unemployed person need to wait until they run out of unemployment to qualify? Why tie businesses hands by requiring them to make the job permanent? I do agree that an employer shouldn’t get funds if they lay someone off and rehire the same person. Let’s get people back to work right away and get our economy growing again.
John Fuller
Jfuller999@yahoo.com
The other factor in the lack of value of this proposal is that a income tax credit for the company is only useful if you have income to shelter. zif you sre losing money these days, like many of us are, then a credit towards non-existent income is worthless to us and provides no help. Typical political lunacy.
We're in a prisoner's dilemma: if these bums would hire demand would rise in no time and we'd be out of the recession. Fear prevents them from doing the right thing.
Maybe we should start talking about tax PENALTIES for businesses that refuse to hire; that would cause them to pay attention.