Friday, February 19, 2010

The Myth of Small Business Creating “JOBS”

First let me tell you I am a free market capitalist, and that I admire entrepreneurs and small business women and men. I support government aid for small business.
However, the major media (including FOX) and the federal, state and local governments are foisting a complete fraud on the American people. Although small business do make jobs, many of those new jobs come with low wages, no health care and statistically shaky career prospects.  So when they talk about helping small business make jobs, they are not really talking about the florist down the street, they are talking about the “larger” small business. They are pandering to all the really small business men and women who will not survive this recession, in the hope for their votes. (both parties are guilty here.)
Here are some facts, make your own decision about my points.
Small business are defined by two things (see SBA). The first is $ volume of trade and the other is number of employees.
A SMALL BUSINESS CAN HAVE 500 EMPLOYEEES, in some categories as many as 1000 employees. In construction a home builder is a small business until they build $33,500,000.00. That is not a “small business”  in my mind.
Some other statistics from the SCORE Website:
Small Business Openings & Closings in 2008:
  • There were 627,200 new businesses, 595,600 business closures and 43,546 bankruptcies. (THATS A NET NEGATIVE in 2008, 2009 must be worse)
  • Seven out of 10 new employer firms survive at least two years, and about half survive five years. (That means lots of employees employed for short durations, a cup half full or half empty)
  • Findings do not differ greatly across industry sectors.
Other statistics.
  • The estimated 29.6 million small businesses in the United States
  • Employ just over half of the country’s private sector workforce  (Remember what the definition of a small business is)
  • Hire 40 percent of high tech workers, such as scientists, engineers and computer workers (That’s a good thing,  but my guess is that they are employed in the “larger" type small business, not in the cottage industry down the street.)
  • Include 52 percent home-based businesses and two percent franchises
  • Represent 99.7 percent of all employer firms  (So 0.3 % of employers employ just under half of the nations employees. )
  • Generate a majority of the innovations that come from United States companies (That’s a great thing, but my guess is that larger businesses then swoop in and either steal them or buy them at deep discount.)
The final take away 0.3% of employers (the big guys) in the US employ almost 50% of workers. These few firms have the resources to make work and sustain employment. Half of all start up bsuiness close (for a variety of reasons, not always failure) within five years.
Now here is something you do not hear:
Really small business CAN NOT SOLVE the unemployment problem and they certainly cannot help in the long run without a national health care system to support their activities.
I love the folks down the street who start a plumbing or high tech bsuiness and I wish them the best as they do their small part to help, but it is absolutely unfair for the government to insist that they will save the day!

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