If you say something produces jobs, you can get politicians’ support for just about anything. Conversely if you say something will cost jobs, politicians will be persuaded.
For decades, industry has lobbied by using the jobs arguments. If an industry, say pleasure boat manufacturing, doesn’t like a regulation or a safety standard, the lobby cries: It will cost jobs; lots of jobs rounded to the nearest hundred thousand or million, depending on the size of the industry.
Likewise, if a company fancies a wetland for its next expansion, it will play the jobs card: Nature is nice, but jobs are divine.
At a time of sustained and painful unemployment, there should be no surprise that both presidential candidates are in danger of overdosing on jobs rhetoric.
President Obama waxes about the new private sector jobs that have been created — nearly 4.6 million in the last 30 months with more to come. GOP contender Mitt Romney flatly declares that he will create 12 million jobs if he is elected. Romney hasn’t told us, except in broad flourishes about regulations and taxes, how this is to be done.
Both are sure of one thing: The job will be done by small business, and small business needs tax breaks. These are contestable claims.
It’s true that small business is a giant employer and hires quicker than large business. But there have been studies, notably cited by The Economist magazine, that dispute the conventional wisdom about small business. Be that as it may, small business is more agile in both increasing and trimming its payrolls, which means it holds the key to speeding the recovery.
Taxes are something else.
Both Obama and to an even greater extent Romney say that tax is the key.
Yet small business does not list high taxation as among its problems.
From interviewing dozens of small operators (including restaurateurs, printers, graphic artists, builders, boutique retailers, fastener makers, limousine operators, sail makers and travel agents), I can tell you that small business — if you define it as having 50 or fewer employees — isn’t inhibited in hiring by taxes.
Companies in the 50-employee range are key in job creation because they hire quickly. Alas, they lay people off quickly in a downturn.
The common problems of small business are the cost of providing health insurance; the lack of credit; rents; the quality of the work force; the high cost of professional services, from accountants to lawyers for things like compliance with health and safety regulations.
I’ve had a lifelong fascination with the dynamics and particularly the psychology of small business. I can tell you no one in small U.S. business has ever made an issue to me of the rate of taxation.
Retailers complain about collecting sales taxes and small manufacturers hate having to pass these on. But federal income tax never seems to be an issue. Most small operators, especially those with less than 50 people, are happy to be doing well enough to pay tax.
Also, if you own a small company, even one that employs just a member of your family, you are better off in terms of tax than any wage earner. Make no mistake: There are tremendous advantages in owning a small business because of what you can legitimately write off.
Neither Obama nor Romney comes from a small-business family. Obama simply has no business experience. None. As for Romney, he’s had the wrong kind. The businesses he understands are those that to small entrepreneurs are predators.
Romney boasts about Bain Capital’s role in creating Staples, the 2,000-store office supply retailer. This is a success story for him, but it’s been Waterloo for thousands upon thousands of small office supply stores. The numbers are hard to calculate, but I know how devastating mass retailing has been among neighborhood hardware stores; about 50 are lost when Home Depot or other monster predator chains arrive.
I doubt many if any of Staples’ employees are dreaming of starting an office supply store across the street, eh?