WANT MORE EMPLOYMENT? SMALL BUSINESS ASKS GOVERNMENT TO JUST “GET OUT OF THE WAY” 

July 2011

With unemployment rates stubbornly over 9%, U.S. employment is topmost on practically everyone’s mind. Generally, the American economy is barely adding more jobs than is needed simply to keep pace with normal labor force growth.

Small business is an important element in any employment growth. According to the federal government (as compiled by the Small Business Administration), small business:

1. Generated 64 percent of net new jobs over the past 15 years.
2. Represent 99.7 percent of all employer firms.
3. Employ over half of all private sector employees and create more than half of the nonfarm private gross domestic product (GDP).

A July 2011 nationwide survey by Harris Polls provides an amazingly clear perspective on employment in the small business segment and what needs to change. The poll covered 1409 small business owners and executives, with small business being defined as those with revenues of $25 million or less. Within the small business segment, politicians (and voters) need no longer wonder what is occurring. Here is a summary:

1. The vast majority (84%) of small business owners believe the U.S. economy is on the wrong track. But, this is shockingly in contrast to the optimism that small business owners have for their own business. Nearly two-thirds of the same people believe that their business is “headed in the right direction”. In a different question with a similar result, 1.7 times as many respondents indicated that their business’ best days were ahead of them. But in complete contrast, almost twice as many respondents said that America’s best days were behind us.
2. The top five challenges facing small businesses are:

a. Economic uncertainly (49% of respondents)

b. America’s growing debt and deficit (47% of respondents)

c. The 2010 healthcare bill (39% of respondents)

d. Over-regulation (36% of respondents)

e. High taxes (28% of respondents)

High taxes are a perennial complaint among this group, but this poll is surprising in that four other topics are of greater concern.

3. When not faced with competing challenges from which to make a selection, most business owners expressed concern over the debt and deficit. 64% said the deficit faced a definite immediate or long-term threat, with another 16% saying that the deficit potentially poses such a threat.
4. Very few (14%) small business owners want a “helping hand” from Washington. Instead, these owners were happy with a response that said that they want “Washington to get out of the way”. In a similar response, only 8% of small business owners wanted Washington to provide “more assistance”. Instead, 85% wanted Washington to “provide more certainty”.
5. In spite of the optimism that they have for their own businesses, small businessmen are not planning on adding jobs. In a similar survey a year ago, only 18% of small businesses said they planned to add employees in the coming year. Demonstrating the lack of employment progress, only 19% of small business employers now say they plan to add employees in the coming year, with 64% of respondents indicating that their expected employment will remain the same.

Fulcrum Inquiry performs litigation damages analysis, forensic accounting, and business valuations.