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Thread: why 'growth engine' small businesses aren't, and won't be, Hiring !

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    Banned Melonie's Avatar
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    Default why 'growth engine' small businesses aren't, and won't be, Hiring !

    (snip)"To understand why small business isn't hiring and won't be hiring, you need to understand the psychology of this era and the systemic pressures on all small businesses which don't live off Federal government contracts. In a very powerful sense, those businesses which live from one government contract to the next are not private businesses at all: they are merely proxies or extensions of the government. Their non-governmental work is either trivial or non-existent.

    So when some government set-aside program sanctions $40 million or whatever for "small business," it's no different than opening another government office: the only difference is the employees are not Civil Service. The competition is not between private-sector and government, it's only between rival government contractors.

    What pundits and politicos don't get is small business knows the "recovery" is totally bogus. Why hire somebody who you'll have to lay off a few months from now? Laying people off is emotionally painful--you dread it, tire of it, are wearied by it. This is a real human being who is losing their job, not some ginned-up statistic hyped by some think-tank-pundit pulling down $15K a month for dishing whatever flavor of propaganda he/she is paid to churn out.

    The Washington establishment--the Fed, the Treasury, Congress, the Obama Administration-- seem to believe they've successfully pulled the propaganda wool over Americans' eyes, and that the yokels actually believe "things are getting better and better every day and in every way."

    Only the yokels without clients, customers and payrolls can believe the propaganda.

    Meanwhile, back in the real world, small business income is down 5%.

    Small Business: Still Waiting for Recovery.

    According to data from the Bureau of Economic Analysis. Proprietors' income-- the profits of unincorporated businesses such as partnerships or individuals who work for themselves--is down nearly 5 percent from two years ago, while corporate profits have jumped 21 percent in that period.

    About 19.9 million partnerships and sole proprietorships with no employees existed in 2008, the latest year for which U.S. Census Bureau data are available. That number fell almost 2 percent from the previous year.


    In a private-sector workforce of about 106 million, that's about 19% of all people with a job. Recall that the BLS counts you as employed if you work one hour a week or if you're "self-employed," even if you aren't making a dime.

    Only in the Fantasyland of propaganda does nobody notice that self-employed people who are seeing revenues and profits fall do not need to hire someone: they're sinking all on their own.

    Only in the Fantasyland of propaganda does nobody seem to notice that for every celebrity-chef restaurant opening to gushing hype in Manahattan, West L.A. or San Francisco, two other restaurants quietly closed.

    Small business understands uncertainty is now permanent. That's why 26% of all new private-sector hires are temporary--and if we subtract the bogus phantom jobs created by the BLS "birth-death model," then the number is probably more like a third or even half.

    Small business understands that the "recovery" is merely a Federal towel stuffed in the gaping hole in the rowboat's leaky planks, and that it's literally insane to hire workers when your revenues could evaporate next month.

    Small business re-discovered it could do more with less. Once businesses trimmed payrolls to survive, they discovered they could make more money for themselves and do so with fewer people. Why add to staff when all that means is transferring your own paycheck to someone else?

    Small businesses are closing, not opening. Rents have barely dipped, local government taxes and junk fees have skyrocketed, and the complexities and costs of the new healthcare bill have all added systemic pressures on every small business: it's either adapt quickly and successfully or perish, and many are choosing to close down and quit working so hard for so little payoff.

    When leases expire, the doors close, and no one leaps in to pay boomtime-level rents, and heavy business licence and permit fees. The only people insane enough to hire anyone are three guys working in a living room somewhere, trying to hire a few Javascript programmers to finish their app so they can cash out by selling the "company" to some larger enterprise.

    The programmers are independent contractors who have to take care of their own healthcare and taxes, or they're young and single so the healthcare insurance costs are modest--if they even bother with buying insurance.

    Nobody's hiring for the long-term for the simple reason that there is no long-term: we're either selling the company as soon as we can, or we're waiting for the next dip in revenues to close down before we lose everything.

    Local government has grown accustomed to small business being uncomplaining tax-donkeys, silently paying every junk fee and every additional tax the government levies. Only a funny thing happened on the way to local government's plan to fill the shortfalls in its own revenues by taxing small businesses even more: they're closing down.

    The reason is simple: why work for free? This is incomprehensible to both local governments, who expect all those "filthy-rich small-business Capitalists" to pay higher taxes and fees, and the safely remote-from-the-real-world pundits and politicos.

    These members of the academia-think-tank-media-politico Cargo Cult have a magical belief in a mythical "small business" which is anxious to get out there and create new jobs because "to get rich is glorious," as if "getting rich" is even an option for 90% of real small businesses.

    In the real world, small businesses aren't getting rich, they're going broke and closing down to save whatever remains of their sanity and assets. You want high-tech and "clean energy" jobs? Well, how about MySpace laying off half its 1,000-person staff? How about Evergreen Solar closing its Devens, MA plant, laying off 800 workers and moving production to China? Did the pundits honestly think that globalization was over?

    Memo to pundits and politicos: you worship at the altar of Capitalist profits driving small business--get real. People will do whatever they have to in order not to go broke.

    That's why the three guys or gals aren't renting an office--who needs the overhead? They also don't have health insurance: who can afford $1,000 a month for crappy, confusing "care" young people rarely even need? Better to pay cash.

    And they aren't hiring "employees": they're paying their friends with equity shares, or cash, and paying their own taxes is up to each free-lancer.

    That is the new model of American entrepreneurship: no office, no overhead, no employees, no health insurance, no business travel. That's the only way any new enterprise can survive.

    Everyone who buys into the myth and pays absurdly high rents, junk fees and healthcare insurance will be ground down and bled dry. The only exception are those well-connected enough to run a pipe into the limitless lake of Federal money. Yes, 40% of the lake is borrowed from our kids, but no matter--the "recovery" is real, and this stone with a crudely painted radio dial is in fact a working radio. It's magic. You just have to believe.

    Small business can't afford to believe in myths and fantasies. They are dealing with the harsh reality of adapt or die."(snip)

    from

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    Default Re: why 'growth engine' small businesses aren't, and won't be, Hiring !

    Here's another damper on new hiring. One day after going into the "lion's den" and speaking to the National Chamber of Commerce, Obama announced a DOUBLING of assessments on employers for unemployment insurance.

    Obama never ceases to amaze me. Economic history PROVES that if you want less of something, tax it. He supposedly wants new jobs but just increased the cost of hiring people.

    Federal spending is now 25% of GDP.
    The proportion of Americans dependent on a check from the government keeps going up.
    47% of Americans do NOT pay any Federal Income Tax.
    The Democrat "wet dream" of making EVERYBODY dependent or subservient to the government is coming true.

    A tip of the hat to Melonie who has been predicting this as long as I can remember.

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    Default Re: why 'growth engine' small businesses aren't, and won't be, Hiring !

    The whole thing gets that much more disheartening when you consider what percentage -- spoiler alert: it's huge -- of our GDP correlates with our national debt. The more you look at it from a macro-level, the more you realize that the money that we as individuals & small businesses depend on simply to work & live isn't even -real- to them anymore. It's all just loans. And trying to use those loans to generate business capital strictly within a consumer-based economy -- i.e. selling houses to Americans who can barely afford them, as opposed to exporting goods to other countries -- doesn't actually -do- anything tangible, especially when you consider how much of the economy is going toward multinational corporations which show no federal loyalty.

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    Banned Melonie's Avatar
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    Default Re: why 'growth engine' small businesses aren't, and won't be, Hiring !

    ^^^ the issue of the sheer magnitude of debt, and the very limited ability of future American taxpayers to ever repay that debt ( with equal value dollars anyhow ) is covered in detail in the 'Bend Over and Grab Your Ankles' thread ...

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    Default Re: why 'growth engine' small businesses aren't, and won't be, Hiring !

    Thanks for the tip! =]

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