The American Jobs Act
Well, we’ve seen the President’s new jobs plan—The American Jobs Act—and it looks pretty much like the programs of the 1930′s (which didn’t work very well then until the second world war started). Although I think it is a good idea to fix some of our roads and highways before they are beyond repair, the jobs incentives fell woefully short of accomplishing much of anything.
All the small business owners I know hire employees to grow their business in support of an increase in sales. Likewise, when sales fall off, we all reduce our workforce because there is not enough for all the workers to do. Most small businesses do not have huge cash reserves to carry non-producing workers.
To take it one step further—in a growing economy most small business owners will hire more employees in ANTICIPATION of increased business. However, no anticipation—no hiring.
The federal government can pass out all the incentives they want—in the form of hiring bonuses, payroll tax reductions, and on and on—but the fact remains; if a small business owner does not need a new employee to fill a current (or anticipated) job opening, they will NOT hire a new employee. Small business owners are too savvy to fall for the government’s financial smoke and mirrors incentives.
Why aren’t the people in the White House and Congress smart enough to know this?
Maybe this is one reason why:
- Only 8.4 percent of all lawmakers majored in a field related to economics.
- Only 13.7 percent of lawmakers studied business or accounting.
- Only 11.5 percent studied a field related to science or technology.
- Over 55 percent focused on government or law studies (perpetuation of professional politicians?).
(Data from The Employment Policies Institute [EPI]).
I have yet to find any information on how many people in the White House, or in Congress, have actual experience as an entrepreneur in a small business—but it appears the number would likely be quite small.
And we wonder why Washington cares so little about small business!
Where does this situation leave American Businesses? I think a recent article in The Huffington Post spelled it out pretty well—at least in the manufacturing sector—with the title: “American Manufacturing Slowly Rotting Away: How Industries Die.” What more can I say?
What about your business? Your industry?
I am also wondering if this situation is endemic to the U.S., or do other developed nations, such as the European Union also suffer from government suppression of small (or not-so-small) businesses?
Leave a comment and let me know how your business/industry has been (and is being) affected over the last few years.
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Solar Panels–Forget “Made in U.S.A.”
Three American solar panels manufacturing companies bit the dust in the last month. A fourth, BP Solar, closed down its U.S. plant last spring, moving its operations to China, India and other countries. This leaves China as the dominant manufacturer of solar panels in the world. It should also be noted that China exports 95% of the solar panels they manufacture–many to the U.S.
Moreover, of the two remaining major American manufacturers, the dominant one, First Solar, builds their panels in their factory in Malaysia.
And don’t think it’s because labor costs in China, India, and Malaysia are lower—solar panel manufacturing is NOT labor-intensive…production labor is a very small part of the manufacturing cost. That is why solar panel prices are dropping like a rock—technical innovations (by China) in the manufacturing process make the price of solar panels more affordable for home installation as well as general power production.
But, take a look at the business environment under which solar panel manufacturers in China operate:
- They receive loans from state banks at very low interest rates.
- They receive free or subsidized land to build their factories on.
- They receive extensive tax breaks—at all levels of government.
- China provides a variety of additional government assistance programs.
- China also has a strong base of qualified technical employees.
Contrast that list with what American companies are up against:
- There is no such thing as loans with very low interest rates—even when guaranteed by the U.S. government. (See Solyndra, Inc.)
- Land in the U.S. is extremely high-priced, and especially so for Industrial-zoned land.
- With the exception of a few cities and towns that may defer some property taxes, the additional taxes and local fees for studies, analyses, permits, and government oversight are near criminal levels. (More on this subject coming in future articles.)
- There is little, if any, form of federal, state or local government assistance for developing a for-profit business—this is especially true for smaller businesses. In fact, most local governments try to milk every dollar they can out of small business.
- Finding qualified technical employees in the U.S. is becoming harder and harder, even in these times of high unemployment. (For more information, check here.)
President Obama is about to address a joint session of Congress (and the public) about jobs and the economy, and if he doesn’t address the issues of government suppression of small business, he might as well save his breath to cool his porridge.
I have brick and mortar small business clients that regularly run into the problems outlined above—but, what has been your experience in this area? Please leave a comment, or contact me directly and let me know. I live in the Western U.S., and maybe things are different in the East. I also understand there are many countries that do not have these same problems, so I would like to hear from you also.
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