I was a small business owner for six years after I retired from the big business corporate world. But being a sole proprietor with no employees I really don’t have a good view of just what small businesses are really about. The Republican political leaders say small businesses are the growth engine of our country and we shouldn’t tax them by taking away the Bush tax cuts for those making over $250,000 annually.
How many of the so-called small businesses were like mine just a guy in a shop building things for customers? How many hire more than a handful of employees? I decided to look into this.
Here is a link to a bunch of numbers in this area: http://www.census.gov/econ/smallbus.html
- Of those 29 million about 22 million are business with no employees
- Only one million firms have more than 9 employees
- Only 90,000 (0.3% have more than 100 employees
- Across the United States, small business failure rates rose by 40% between 2007 and 2010
- Only about one if five small businesses will be in existence five years after its creation
I am going to do some generalization about these numbers. I know I am no expert but they seem to be telling me something about these so-called jobs creators. The vast majority of small business were like mine. I worked by myself and had little reason to add an employee. If I got too busy I just didn’t take on additional work. Of course, more often especially in the early years, I didn’t have enough work to make much of a profit. So, twenty-two million small businesses don’t hire employees. But, as I found in the early 2000s there were several tax breaks even for us. I guess I was more typical of a small business than I thought.
From these statistics we know that the “job creators” currently employ about nine millions workers. If they are to cut the unemployment numbers in half that would mean they would have to basically double their number of employees. Maybe I am being a pessimist here but I don’t see any possibility of that happening within the next ten years let alone soon enough to make a difference. Let’s face it that 0.3% of the existing businesses employ the vast majority of current workers. I expect that most those businesses with more than nine and less than one hundred employees are franchised burger and similar places who pretty much pay minimum wage.
From these numbers it is clear to me that if we want to make a dent in our unemployment numbers we must do what it takes to get the big employers to hire more workers. Our government should be putting its tax breaks, and tax penalties, where they are the most effective. A good start would be to discourage the big employers from outsourcing jobs to lower paying foreign countries. Another big savings would be to take the burden of providing healthcare off their backs. We are about the only country in the world that burdens our business in that way. Of course the answer to that is single-payer universal healthcare.
If we just tackled those two problems we would go a lot further in decreasing unemployment than throwing money places that can’t really affect the change we need right now. Can you guess which political party is advocating these two solutions? Small business are important to our country but they are not the solution to our current unemployment. Their numbers are just too small to have much of an effect.
I’m just an ordinary guy with a calculator so what do I know…