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Old 11-18-2009, 08:36 AM   #1 (permalink)
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TFP Job Summit

The Obama administration recently announced plans for a Job Summit.

Quote:
The Obama administration announced plans Monday to hold a forum on jobs and economic growth at the White House on Dec. 3, after which the president will go on the road to demonstrate his concern about the nation's rising jobless rate.

With the nation's unemployment rate at its highest level in 26 years, President Obama plans to bring together CEOs, small business owners and financial experts to sound out ideas for continuing to expand the economy and create jobs.
44 - White House announces a jobs summit on Dec. 3

I thought we could have our own job summit right here, and who knows maybe we can affect policy.

As a small business owner the obstacles I face when I consider adding employees are:

Taxes - I not only face the cost to employ a person in terms of their wage but I also face payroll taxes, unemployment taxes and work comp premiums (not technically a tax but I no choice but to pay the premiums). Many employees don't realize how much these taxes are, not to mention the costs to file and pay all these taxes.

Costs - Additional employees require office space, equipment (in my case a desk, phone, computer, etc), and training. These costs can be thousands of dollars before the employee does anything to help the bottom line.

Time- In order to hire someone I have to invest a lot of time in advertising, reviewing applicants, scheduling interviews, conducting interviews, checking backgrounds, negotiating pay, making an offer and coordinating initial employment issues.

Risks - In order to hire someone I run the risk of making a mistake that could be a violation of state/local or federal employment law. I could be sued for legitimate reason or for no legitimate reason but in either case I face the costs of defense.
Being a small employer every person I hire initially wants to work for me, but I always face the risk of them leaving when a more "sexy" employer comes calling. In that case I wasted a lot of time and money in hiring the person and training.
Every time I hire a new person I have the risk that they don't really give a sh*t, and they can easily ruin customer relationships that may have taken years to develop with a single act.

Uncertainty - I don't know what state/local or federal mandates will be applied to me in the future that may dramatically increase my costs or cause me to go out of business.

Minimum Wage - I would love to give young people an opportunity to learn my business or just to get some experience, but they don't know anything and would add no value to my business. If there was a way for me to give them this opportunity without it costing so much I would do it.

Credit Availability - When I grow my business my receipts don't match my expenses. Expenses for the increased activity comes first and having access to credit is needed to bridge the gap. Currently, new credit is not being made available to small businesses and existing credit has been reduced and is at a higher cost.

Given the above, hiring an additional person is the absolute last thing I want to do. If there is any way for me to get by without hiring a new person, I would do it.

So as a starting point the above are some obstacles, I am sure other businesses face other obstacles or share some that I have. So, lets put those obstacles on the table and discuss solutions. Also, there may be some solutions for creating jobs that don't involve small business (I don't see how, but I am open) we can put those on the table as well.
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Last edited by aceventura3; 11-18-2009 at 08:39 AM..
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Old 11-18-2009, 10:10 AM   #2 (permalink)
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I'm not convinced that small business really is the engine driving employment. I've heard that assertion, but I'm skeptical. Anybody got any numbers on percentage of working America employed by size of company? My sense is that keeping big banks alive a few months ago probably saved more jobs than helping 1000 small businesses would have.

I'm all for lowering barriers to economic activity, though, provided potential (or historical) abuses are regulated against.

Just out of curiosity, ace, what do you do in your business?
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Old 11-18-2009, 10:36 AM   #3 (permalink)
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Small business in the U.S. employs about half the private labour force, and 97.5 percent of all firms have fewer than 20 employees.

About the USA > Small Business
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Old 11-18-2009, 12:28 PM   #4 (permalink)
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Location: Ventura County
Quote:
Originally Posted by ratbastid View Post
I'm not convinced that small business really is the engine driving employment. I've heard that assertion, but I'm skeptical. Anybody got any numbers on percentage of working America employed by size of company? My sense is that keeping big banks alive a few months ago probably saved more jobs than helping 1000 small businesses would have.
Another way to look at the issue is in terms of the general life cycle of a business. Think about a business like Microsoft as an example. They currently employ about 90,000 people world wide. It is unlikely that Microsoft is going to have significant job growth (organic - or growth based on the natural growth of the business as opposed to acquisition) in the future. But to get to 90,000 employees, Microsoft started with two employees, Gates and Allen. Like most companies that make it to "big business" status they grew into it starting as a small business. When a "big business" matures the growth of new employment stops or declines. Even the small businesses that don't get to "big business" status goes through a growth cycle. They start, they grow (new employment), they sustain (no employment growth), they die or get swallowed by another business (decline in employment).

The sweet spot in employment growth is in having a thriving economy with growing small businesses.

Quote:
I'm all for lowering barriers to economic activity, though, provided potential (or historical) abuses are regulated against.
Example - Employment Law. It is very complicated, I am not an expert, I don't have an HR Department, retaining lawyers costs money, but I have to do everything perfect or a single error can cost me my business, I have to spend a lot of time staying on top of all of these issues. I have no interest in breaking the law, however, abuse is on both sides. I have had people file false claims of discrimination, false claims for unemployment, false claims for workers compensation. As a small business no one comes to my aid, I get no help, I fight fraud on my own.

Quote:
Just out of curiosity, ace, what do you do in your business?
I am in the insurance business, I provide services for insurance companies.

PS - One thing I didn't include in my OP.

Assume everything works out I hire a good employee. Not actual numbers but let's say the employee gets paid $50,000/year, it costs me $75,000/year, and the employee helps me generate an extra $100,000 or a net profit before income taxes of $25,000.

First, that employee comes to me and says - "hey give me a raise, I made you $100,000 and all I get is $50,000, it ain't fair" (under his breath - "you greedy capitalist pig"). But wait, if I have a "C" corp, that $25,000 gets taxed and then if I take money out of the "C" corp it gets taxed again on my 1040. So that $25,000 may end up being $10,000. And now that employee says give me a $15,000 per year raise or I quit. What do you think I say?

Or if it is an "S" corp that $25,000 goes straight to my 1040 as payroll income or potentially self-employment income, either way subject to personal and payroll taxes, phase outs and all other "tax the rich" (even though I aint' rich) schemes. Again, what do I say? Basically, I say its been nice knowing you - and if you find a job paying you what you want, put in a good word for me because I won't be far behind you, I just have to turn -off the lights and sign everything I have over to Uncle Sam.
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"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."


Last edited by aceventura3; 11-18-2009 at 12:34 PM..
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