Graves: Small Businesses Key to Economic Recovery
On Friday it was announced that once again many Americans were handed a pink slip instead of a paycheck. May’s disappointing unemployment numbers are more proof of the failed big-government policies of the Obama administration and are why we must do a complete 180 to get our economy on track and Americans back to work.
This recovery has been weak because of the uncertainty that persists among our nation’s primary job creators — small-business owners. Our nation’s small firms create seven of every 10 new jobs, and they employ more than half the country’s private-sector workforce. If we want to successfully address our nation’s unemployment crisis, we must promote policies that provide confidence to small businesses.
Last month, during a town hall event, President Barack Obama encouraged businesses to “step up” and hire workers. In reality, businesses haven’t been sitting on revenues because they want to. It’s because they are nervous about the uncertainty that this administration has created. Small-business owners are continually burdened by the possibility of tax increases, the inconsistent flow of credit, an outrageous national debt, high energy costs, overreaching federal regulations and the looming Obamacare mandates.
The president and Congressional Democrats have promoted overregulation, overtaxing and overspending policies in the name of “stimulus” and “infrastructure” funding, but three years of this simply hasn’t worked. If you don’t believe me, just look at the numbers: May’s unemployment rate is 9.1 percent, marking the 28th consecutive week of unemployment rates at or above 8 percent — the level the president said unemployment would never reach if the stimulus passed. The paltry 54,000 jobs created in May was the weakest output in eight months, and the unemployment rate is the highest since December of last year.
The American economy has lost an average of 2,813 jobs every day under this administration, and the average number of weeks that job seekers have been unemployed is 39.7. And let us not forget about the rate of underemployment — the unemployment rate combined with the percentage of part-time workers who want to work full time but can’t find a full-time job. According to Gallup’s monthly employment survey, this rate stood at an astonishing 19.1 percent during mid-May.
Even though the recession technically ended two years ago, the pace of economic growth has been too slow to make up for the ground lost following the financial crisis of 2008 and 2009. Gross domestic product growth in the first quarter of 2011 fell to 1.8 percent, down from 3.1 percent in the last quarter of 2010 — this is the slowest economic growth since the second quarter of 2010. We know that these economic indicators point to the low performance of small businesses, considering that small companies account for more than half of the nonfarm private GDP.
Many large companies are also holding back on investing in their business despite increased profits. A new report issued Monday by Standard & Poor’s Valuation and Risk Strategies estimated companies on the S&P 500 will likely pay essentially the same amount of taxes in 2011 as in 2008, suggesting profits are returning to pre-recession levels. It is also interesting to note that fewer companies are falling behind on their existing loan payments, which shows that many companies have the capacity to add jobs when confidence in the economy returns.
Providing certainty for America’s small businesses should be the No. 1 priority for Washington, considering they are the backbone of our nation’s workforce and the engine of our economy. According to the Small Business Administration, small firms have generated 64 percent of net new jobs over the past 15 years. If the president and Senate leadership want to try new strategies to address the unemployment crisis, they must look at providing certainty for small businesses first.
House Republicans have put forth a Plan for America’s Job Creators that includes common-sense policies that remove uncertainty by reducing regulatory burdens, lowering business tax rates to 25 percent, spurring exports by passing the pending free-trade agreements and introducing a budget that gets our nation’s fiscal house in order. If given the chance, these policies will create an environment where small businesses are enabled to grow and invest, which will help speed up this recovery and return our nation to the strong economic engine that we are accustomed to. Providing certainty for the estimated 27.2 million small businesses in America is the key to fixing our unemployment crisis.
Rep. Sam Graves (R-Mo.) is chairman of the Small Business Committee.