Can You Imagine The Growth A Little Stability Would Bring?
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Small businesses in America are the engine that drives our nation’s economy. According to the U.S. Small Business Administration (SBA), a small business is defined as, “an independent business having fewer than 500 employees.” That certainly fits the definition of most of the HVAC, contracting businesses that I know. Some other interesting small-business facts from the SBA:
- Small business represents over 99% of all employer firms and small-business owners employ half of all private sector employees and pay 44% of total US private payroll.
- In the past 17 years small businesses have generated 65% of net new jobs and small businesses hire 43% of high tech workers.
- The smallest of small-business firms (fewer than 20 employees) spend 36% more per employee than larger firms to comply with federal regulations. Very small firms spend four and a half times as much per employee to comply with environmental regulations and three times more per employee on tax compliance that their largest counterparts.
Why is it so hard for the folks in Washington to understand that what helps small business helps our economy? And conversely, what hurts us also hurts our economy.
Business owners, particularly small business owners, need certainty. Are we going off the fiscal cliff? What will the income tax rates be next year? What will the Affordable Care Act (Obamacare) mean to my business? What will capital gains and estate taxes be?
When things are uncertain or unknown, folks sit on the sidelines and wait for signs of stability.
As I’m writing this in early January, there are just over 12 million people unemployed in the United States, but there are nearly 89 million more people who are not in the work force – they’ve given up looking for a job. That number is growing. While there are 229,000 fewer folks unemployed than a year ago, there are 542,000 more not in the work force. Fewer people looking for work is what has caused the unemployment rate to drop – not job growth.
The question has been asked – Does the extension of unemployment benefits to almost two years, help or hurt the economy? Some argue that without the extension of unemployment benefits that there would be even less money being spent in the economy and recessionary pressures would increase. Others claim that many folks will not actively seek work until their unemployment benefits expire and that not extending such benefits would encourage people to return to the work force.
Rather than trying to exact more taxes from a shrinking group of taxpayers, it would make much more sense to give businesses the certainty needed for them to confidently move forward with plans to expand and grow and hire the additional employees they need to address the increased demand for their goods and services. Offering us a tax incentive for hiring new employees doesn’t really do much. How many of you ever hired someone because you knew that the federal government would give you a tax credit? If you’re like me, you hire someone when the demand for your goods and services cannot be met by your existing staff.
Just like the business owners who have been sitting on the sidelines, most consumers have been doing the same thing. Uncertainties about their future employment and earnings have caused many consumers to hold off on making big-ticket purchases, including replacement of their HVAC systems.
Imagine if Congress and the President were able to work together in a truly bi-partisan way to do what’s best for our country and stop worrying about trying to make the other look like the bad guy.
Imagine if we didn’t practice class warfare where successful business people are seen as evil and greedy.
Imagine an economy where consumers were comfortable and confident and were willing to spend money and where businesses were likewise confident that a growing economy was upon us and were willing to make the investments necessary to grow their businesses. Imagine an economy where government encouraged growth and success instead of saying “you make too much to keep all of that.”
Imagine what would happen to tax revenues if many of the unemployed and those not currently in the work force found jobs and became taxpayers again. This is not trickle-down economics – it’s just plain common sense.
Let’s hope that it doesn’t take much longer for those in Washington to realize that without certainty and confidence, our economy is not going to grow the way we all want it to.
