Posted on 09/05/2011 9:23:26 AM PDT by freedombiz
Despite government efforts to stimulate job creation with tax breaks, small-business owners have said they have to see improvement in their revenues before they feel comfortable hiring again.
Now Sageworks Inc., an analyst of private companies’ finances, shows there really is a correlation between business sales and unemployment.
Over the past eight years, sales growth at privately owned businesses has moved in inverse relationship to the nation’s unemployment rate. “When sales were down, unemployment was up,” Sageworks says.
(Excerpt) Read more at jan.ocregister.com ...
wow! What a brilliant observation! Genius level thinking. Maybe someone will tell the Democrats about it. Nah. They wouldn't get it.
...................When sales were down, unemployment was up.......................
I’ll bet that a $2 million grant for this study was part of the stimulous package!
Eureka, supply demand is alive and well. That will be 2 million dollars, please.
Go to the original source - OC Register. Lots of great articles about why CA is falling apart.
The Wizards of Smart strike again!
Please tell me the government didn’t pay someone to figure this out.
There has been a fair amount of BS thrown around about why companies aren’t hiring. Some companies looking for new employees with very specific qualifications probably hire new people when they aren’t experiencing growth.
But far and away most businesses do not hire new people until demand for their good or service increases. Then, they will handle that increased demand with existing employees and work overtime until they are convinced the new demand will be longer term new demand. Then the decision will be made to hire new people to meet the established new demand.
And if a business is profitable, changes in tax rates and other governmental changes will not keep the business from hiring new people if demand has increased. Government action can screw up the economy and decrease demand in many areas.
It does seem to run contrary to Obama and his backers' theory that food stamps and unemployment checks boost the economy. Who'da thunk that it takes some monetary incentive for folks to be willing to foot the expense of hiring???
Only part of the equation. People can't buy unless they have disposable income. Said incomes have been crushed by COL expenses and taxation whether direct or via proxy purchases.
The best means of stimulus would be an immediate income tax cut of 10%. The longer lasting, the more tangible effect. A temporary decrease would result in savings, not spending. Long term would inspire more spending over a longer period, driving some amount of economic growth proportional to the extent of the effort to reduce income confiscation.
In other words, we aren't going to see anything competent or meaningful from this regime, so give it up already and focus on 2012.
Hope everyone's having a decent holiday weekend.
Who are these people and how much medical pot did they smoke?
My company (I'm now retired} if offered the incentives presently offered by the government wouldn't hire or make major investments.
Your business plan to grow your sales just isn't that short term. If you can't sell what you produce with an acceptable profit don't bother, find a better place for your investment.
Sales growth might not result from a business plan, but from an upturn in the economy, or the demise of a competitor, or some other factor outside the influence of business operators. When that happens, a going concern will either add employees to meet the new demand, or they'll watch some competitor supply the new demand.
And 'investors' can't just go in and out of businesses at the drop of a hat, unless they don't mind taking losses and have almost unlimited funds.
If this economy finally turns around and begins to grow, hundreds of thousands of businesses around the US will realize some growth not a result of anything they did. They'll meet the demand or watch competitor do it.
There are two problems:
1. Much of the US consuming public is still using “found” cash to increasingly de-leverage their personal debt loads.
The only sector of consumer credit in the US that is increasing is student debt. Credit card rates are absurdly high:
2. And then we have 45+% of the US income tax filers are not paying any income tax.
http://money.cnn.com/2011/04/14/pf/taxes/who_pays_income_taxes/index.htm
This is why the “cutting taxes” formula won’t as it has in the past. We now have a huge cohort of the consumption economy who are levered up to their eyeballs, they won’t see any benefit from an income tax cut, (they might see a benefit from a payroll tax cut), they have not seen their wages grow in a decade and they strip-mined the equity out of their houses in the last 10 years.
Thankfully no. Sageworks is a private company
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