Posted on 08/25/2010 6:15:23 AM PDT by TigerLikesRooster
Why Small Businesses Aren’t Hiring
By Scott Shane Tuesday, August 24, 2010
Filed under: Economic Policy, Boardroom, Government & Politics, Public Square
In the recoveries from the previous two recessions, small businesses led job creation. This time, however, small businesses aren’t hiring. Here’s why.
In the recoveries from the previous two recessions, small businesses led job creation. This time, however, small businesses aren’t hiring. That about-face has left a lot of economic prognosticators scratching their heads. I think the reason is clear. The collapse in home prices is holding back small-business hiring. And unless we fix the residential real estate mess, we won’t see small business hiring anytime soon.
The weak residential real estate market is keeping small businesses from hiring in five ways:
1. Declining house prices have softened demand for small businesses’ products and services. The 29.5 percent drop in home values from the first quarter of 2006 until the end of the first quarter of 2010 has led to a huge drop in household wealth, which has led to reduced consumer spending.
Studies show that consumption falls by about 8 cents for every dollar of decline in wealth. Thus, housing price declines have taken a bite out of consumer demand. Also, because small businesses generate half of non-farm gross domestic product, they are the recipients of a big part of the housing-price-driven decline in consumption.
(Excerpt) Read more at american.com ...
P!
Why Small Businesses Aren’t Hiring ????
They have, over 3 million according to Plugs
We need industry in America, and that industry CANNOT be making bigger and bigger homes UNLESS we have people with jobs.
A much weaker dollar - and much stronger yuan - would solve a lot of problems in short order.
Where Are the New Jobs?
Add in uncertainty about costs due to taxation, health care and “tax and cap.” Businesses don’t know exactly what their costs will be next year, but they do know it will be very bad.
They are doing what any entity does when it is under assault; they are digging in and hanging on to what they have, they are not looking to expand.
Even if they have business demand, small businesses aren’t hiring because:
1. If they hire someone and then lay them off, they are on the hook for increased unemployment insurance payments.
2. They can’t predict what the impact of obamacare will be on their costs.
3. They can’t take a 179 deduction next year. For many this equates to having to let go of 3 employees.
4. They can’t predict what the tax bill will be for next year. They at least have to put in %110 of the prior year.
5. Due to obama hidden taxes on specific businesses they can’t predict how these hidden taxes will net out in their cost of materials.
6. State and city tax agencies are making up tax claims to generate tax revenue by extortion.
7. With the fed printing money, most businesses are counting on inflation at some point. For many businesses it is very difficult to raise prices. They will be squeezed out of existence by inflation.
That is an easy one-> OBAMA
Why business in general aren’t hiring.
The democrat party fedgov forced banks to make loans that they would normally make. Loans went bad. Feds stepped in and forced the bad loans into the investment arena. Capital investment is the starting point of business growth. Private business leaders know that the govt can’t run anything well. The feds took over the banks, the mortgage industry, the auto industry, the medical industry and they are working on the oil industry. Believe me, the petroleum industry is on their target list. First they destroy it, then they step in to “rescue” it. Fits the pattern. Add to that traditionally, dimrats raise taxes first then spend it all and then some adding to the deficit. This go round, they passed a big pile of spending into law without funding it. The tax increases coming down the road will be massive and no one knows what it will be or how much it will cost.
The business of America is business and in years past, the environment was fairly stable. This current govt has turned the business climate into a mix of Alice in Wonderland and a bad Pink Floyd inspired drug trip. NOTHING is normal or predictable.
IMHO, this was planned and intentional. NO one can screw up this badly. So businesses and private citizens (non govt workers) are hunkering down to try to keep what they have.
Good list. I’ll add one:
1099’s. Small businesses will now have to report on purchases made from suppliers in excess of $600. Was in the Health Care Bill for some reason.
As a small business owner I feel under assault by this administration.
The market and businessmen can adapt to anything except uncertainty.
In our part of the country, many small business are (were) related to the residential/commerical development industry;
Concrete, earth movers, framers, plumbers, electricians, drywall, roofers, masons, engineering and land surveying etc.
We’re not hiring because there is not enough work to justify taking on all the people we had to lay off in the last 2 years. (some of which are still collecting unemployment—a luxury we do not have)
The cost of running small business is outrageous.
Taxed to death, state and federal witholding’s, liability insurance, vehicle/office expenses, unemployment and workers comp.
Can’t get loans to even get by.
There’s no money.
Cash flow is weak. Expenses piling up and everyone that owes you money has filed bankruptcy.
Many small business owners did not plan on retiring at age 55, but it seems like many of us may not have a choice.
Sad thing is, some small business owners had to dip into retirement funds to keep the business open.
In the eyes of the enemy left: everything is going as planned.
(evil—just pure evil)
The reason small businesses are not hiring is uncertainty. Small businesses are currently in survival mode - trying to keep the doors open until the real recovery starts. They are not about to take on any additional expense(which includes purchasing new equipment as well as hiring) until they are certain of better sales.
7) Many American workers, having gotten used to middle class salaries being paid for positions which did not require any particular professional skills or talents, still balk at small business salary levels and work responsibilities (yes, you really do have to clean the store, too...)
“They are doing what any entity does when it is under assault; they are digging in and hanging on to what they have, they are not looking to expand.
“
Dittos!
Of course part of the reason that people are not buying houses is they lost their jobs, both feeding each other. It's the exact reverse of the housing bubble where jobs and homebuying fed each other. Maybe we need another source of jobs like maybe exports.
But.....;It will take decades to undo the damage from just the Socialist Health Care bill which has not even fully kicked in yet. The actual projections and cost to us dumb taxpayers is well over ten times higher than what the Congressional Bullshit Office claimed, to help get it passed.
Add to that, the 4.4 Trillion dollars they have spent since MaObama took to the taxpayer funded vacation/golf course, White House rock concert, Pizza and Jap Beef flown in with Air Force One, World wide tour, icecream slurping position we used to call the Office of the Presidency, we have an economic disaster that will make history.
This thing has not yet really even started to rear it's ugly head yet. When it does, most small business will no longer exist.
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Why Small Businesses Aren’t Hiring (hit hard by the collapse of housing price)
“
A couple of months ago my dear old mom had a 2-year-old water heater that
“quit heating”.
She got a repair-man to come look at it; he did it in no time as
he knew of a certain button that had to pushed to reset the unit.
ANYWAY...he mentioned that his company had a staff of 12 workers during
the boom years.
But now the staff of the company was TWO.
It gave us pause to to wander...what are the other 10 guys doing?
Working on “shovel ready” projects?
Drawing state and federal welfare?
It’s scary out there.
...not to mention NINJA (No income, no job or assets) loans.
The CRA (a socialist 'gimmie', based on racist redistribution of wealth) drove the bubble, people used 'home equity loans' in the rising market to milk it (double the price and the increase shows up as 'equity' on paper, borrow the equity, buy a new car, all for no money down. Taxpayers pick up the tab. See how easy that was, and when you have all those ACORNS and others to advise you, you can't lose, unless you pay taxes.)
” Of course part of the reason that people are not buying houses is they lost their jobs, both feeding each other “
More important are the MILLIONS who FEAR losing their jobs.
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