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Guest Post: Why Small Business Isn't Hiring And Won't Be Hiring
Submitted by Charles Hugh Smith from Of Two Minds
Why Small Business Isn't Hiring and Won't Be Hiring
Pundits and politicos promote a magical myth: a coming small business hiring boom. That fantasy is completely disconnected from the harsh realities of private enterprise.
Regardless of their ideological persuasion, pundits and politicos reliably repeat the mantra that "small business is the engine of jobs growth." The mantra is followed by the pundit-politico's belief that a "small business jobs boom is right around the corner."
I have news for the pundits and politicos: ain't gonna happen. Why? The answer cannot be found in the manipulated and massaged Bureau of Labor Statistics numbers (have any real jobs been created, net of jobs lost, in the past year? Who knows?) or in the punditry's Cargo-Cult-like belief in a mythical "small business jobs machine" that they have never experienced and know nothing about.
While a handful of the new crop of politicos are entrepreneurs, most Washington denizens are attorneys, the offspring of wealthy or politically connected families or people who have lived off the government at some level their entire lives. Most have never had a customer or client or had to borrow off a credit card to make payroll. (I have; any pundits who can honestly raise their hands for that one?)
Pundits come in two flavors: the academics, happily making mud pies in the moat surrounding their secure Ivory Tower, and the loud-mouths who have screeched louder and longer than the other media-monkeys. All know less than zero about actual small business.
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.
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...inpedendant researchers
Earth to Moron: Those "indepedent" researchers are completely supported by the taxpayer who has no vote in matter. Look around here, do you really believe the TeePee (who couldn't pass a high school physics exam) gang who admire Charles Hugh Smith is going to support IP development?
Well I did not know we were in a spelling bee!
Basic research as a whole is not profitable as you point out but a small business can be created around a home run technology. A researcher at a university can strike while the iron is hot and create a company outside of the institution with IP agreements inplace. This gives the researcher the ability to get investor capital and operate "independently." The alternative would to be to offer up basic research IP at a wholesale price to big companies that may not have the experts to see it through to a commercial product.
Technology does sometime fall through the cracks to normal people though. As an example there is small outfit I had a conversation with that uses cell phone wireless infrastructure for wireless well monitoring/control systems for rural municipalities. Diggering a mile of cable is much more expensive than popping in a SIM card on board and having it send and recieve text messages. The guy running the operation was previously an electronics tech.
I am a big proponent of basic research (tax payer funded) but as you aluded to Amerifats have no concept of what it is and why it is important.
People can recover from severe degrees of starvation to a normal stature and function. Children, however, may suffer from permanent mental retardation or growth defects if their deprivation was long and extreme-in excess of 12 weeks.
Its not the size it is how you use it.
By it I mean the revenue. if you use it to pay off enough politicians, then you can become a big company that gets laws and bills passed in your favor.
You can get people to take drugs that don't work or even that hurt you,
you can trade with other people's money in a Ponzi scheme, and not be punished.
You can have sanctioned monopolies that don't let small businesses even compete.
If you get enough greedy lawyers, accountants, and politicians in one room. you can fuck over tons of people, and get away with it easily.
Small business grinding to a halt, due to just not being worth it to continue, is what I see too. It's bizarre. No one can plan. What thoughtless law is next? The US government's new health law has small business paralyzed. Much like, 300 AD Rome. People stop working for free, in protest. The government then taxes people on their potential income, taxes without income. Then people without leadership unite to make, government, Rome, irrelevant. Just like the Irish Land War. England became irrelevant in Ireland. The Irish Indpendent today called the Irish forclosure crisis, the beginning of another Land War.
A very well reasoned article and one that should be shared and widely circulated.
+++
I just sent this ZH link to 32 people.
"That is the new model of American entrepreneurship: no office, no overhead, no employees, no health insurance, no business travel"
The new model is that there is no model.
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.
I can relate to that. Just the regulatory nightmare and associated fees and taxes for my small biz is making my head explode. I have just about had enough.
Related:
http://www.theagitator.com/2010/10/27/why-chuck-cant-start-a-business/
Article left out one key component of small business growth... access to capital (via bank loans or whatever)
How is a small business with a certain element of risk to it supposed to compete against the free money policies of the fed?
My small business doing $2.5 million / yr in revenue couldn't even get a loan for a paltry $500k for capital improvements.
I wouldn't give you a loan either if that $2.5 million revenue is on a $7.9 million overhead.
I like salespeople, though, on a personal level. Most of the good ones believe in absolutely nothing. Just like me.
as a former sole proprietor, i will note that Everything the author say was true for my business, plus one more thing - getting paid was hell. the larger the client, the harder it was to get them to choke up the money they owed me. and the big out-of-state clients? HA - they put me out of business. those that have, get more...
Our "small business" group plan currently has premiums of $1200/month for a family of 4. Our deductible is $3k and our co-pay for prescriptions is $10 to $60. My daughter needs care and some of it is unreimbursed. My health care costs are $30,000 per year. Beginning April, the monthly premium jumps to $1500.
Arizona public schools are the worst in the Country. We were 49th, but we dropped to 50th in 2010. So, education adds an extra $1500/month to my monthly nut.
Education plus Health Care = $42,000/yr (approx)
I am a dual citizen (Canada/U.S). IF I move to Canada, the $42k disappears overnight. The education is excellent and the health care is "fine" (I didn't say "amazing", simply "fine"). Instead of perpetual war, Canada reinvests in its citizens. The tax rate is around 33%, BUT you get benefits -free health care/education.
The U.S only has a couple years left, so I will probably stay here until then. IF the U.S makes it past 2012, it will hit a huge wall in 2014.
Huge run in small caps, no sign of it slowing down yet.
Stocks seem to be pricing in a boom of epic proportions.
RobotT,
Most of the commentary here is about very small businesses, not listed small cap stocks which are perhaps 500 x as big.
Most of us replying here are street level folks who are suffering as the BS rolls ever on...
It goes to show, businesses that can symbiot into the wall street flimflam are doing fine in the altered reality of stock options on steroids.
Small caps being 100-500 million annual gross revenue.
It's up against the top of a multi-year wedge/channel (weekly chart). If it pops and holds that as support, all hail The Bernank.
I think it's going to pull back a bit, but what do I know. XRT is on viagra too. There has to be a pull back of some sort here, way overextended short term.
"That is the new model of American entrepreneurship: no office, no overhead, no employees, no health insurance, no business travel"
What does this Smith conman do besides sell the TeePee lifestyle to morons? A teepee and an opium pipe, Charles Hugh Smith's vision of America.
Your condescension and ridicule say nothing about those who you deride, but it says a great deal about who you are!
Your a teepee, your a wigwam, your too tense.
Ha, two tents nicely done..
Excellent points - I deal with many small business owners and while they have climbed out of the bunker, only a few are hiring and the effort is minimal. They do indeed see that all of this is fake and they know that pay-up time just got shoved a year to two out. Hardly far enough to embolden them to make any major capital investment, take on any sizable debt, or go on a hiring spree.
Only the big-company oligarchs can fill that role. The small business arena knows this is all a sham.
On that note, this market is absurd. Woe is the day when everyone decides to collect their profits and jam through the door first ... could make the Flash Crash look mild.
Then again, the Dodd-Frank joke, er, reform isn't being debated again, so perhaps there is no reason for the TBTFs to implement their finanical terrorism again.
Oh, but wait, maybe Ron Paul will give 'em something to terrorize again ... starting tomorrow.
Just how much longer until they get called on this general lack of hiring and contribution to the high unemployment rate?
It may become a political necessity to hire(US citizens, in greater numbers, for more secure engagements) unless they want to become targets. Not the news one would want to hear, but it would be the next logical step.
Charlie neglected to post this on his own site
today. of2minds has been alive since fight club.
What's that say about one man operations?
He did not neglect to post this on his site, just sayin..
He is one smart, reliable individual.
Bottom line: the current stage of Capitalism, Monopoly-Finance, presupposes increasing consolidation in order for the banker-gangsters who run everything to extract more from real enterprise.
Small businesses are basically a fiction these days. A small group of hangers on, getting smaller. Unfortunately.
Except for legal fictions like S-CORPS that treat hedge fund pirates like small business owners. When Uncle Sam talks about 'small business', he really means "hedge fund brigands".
Obama's speech yesterday to the Chamber just REEKED of entitlement. When he told those business people that they must share their profits with employees, the implication was that they don't already. They DO! That "share the wealth" is called SALARIES, COMISSIONS, and BONUSES!
What Owe-bama was really saying is that they don't give up ENOUGH! If investors, small business owners, and stockholders don't get sufficient returns on their investments, the won't invest at all! This reduces capital investments, R&D (apparently progressives believe that only the GOVERNMENT is an appropriate investor in R&D, but with an abysmal track record), and HIRING, thus resulting in fewer jobs and less economic activity.
What a laugh! Owe-bama, with NO business experience, and never having had a real job, lecturing business people on how to run a business! If it wasn't such an absurd joke, it would make me cry!
Owe-bamey has never had a real job so he would not understand. Been on the government "teet" his whole life. Probably got free money for college using all the angles available.
USA is going to look a lot like Europe in ten years, black market and grey economy. Lot's of cash and barter system in place between small businesses. If you can;t make your own money or are unable to get on the government teet you are in trouble.
+
"Probably got free money for college using all the angles available"
Probably? As an undergraduate, Obama was on a scholarship program for foreign students. The man knows his way around that big teat in the sky, but I doubt he could run a snow cone cart at a profit.
I'm quite confident that Obama had (and still has) a lot of anonymous sponsors who prefer to remain in the shadows.
Except that corporate profits and executive pay have soared for the last 40 years, and workers wages have flatlined.
The do-nothings get paid, and the real workers get screwed: that's called Capitalism.
It truly is not but the corruption is so endemic and pervasive that trying to argue the point becomes tiring and frankly you are not wrong enough to spend the time trying to convince myself...+1
Well, it truly is. And that's how the awful game has been played for 500 years.
It's just been that much more grotesque and exploitative in the last couple decades.
You wouldn't know capitalism if it hit you upside the head. The last eight decades have been socialism. Please open up an economics dictionary.
Thanks Sean, sometimes I run out of energy to point out the true difference as the corruption grows exponentially.
At this point, wouldn't uncertainty be priced in? I'd think by now that it's more a political weapon versus actual uncertainty. Seeing how some of these posts are only confirms that it's the former, and less of the latter.
At some point, such action will be stopped - even if by force. While I'd not like it, it's something to consider when you are making the unemployment picture that much worse for that much longer.
I think the people who "junk" should be outed.
I know it is you Steve Liesman and Harry Wanker!
Junk me bitch!
Junksexuals have rights too...
Over-leverage is also holding them back. I don't know how many zombie companies are at banks, but my informal polling suggests quite a few...
Fundamentally there are a lot of companies that were 3-3.5x leveraged at the start of the recession...say they lost 20-30% of their business, resulting in current leverage of 4.5x or more. The company now lives to pay interest and maybe some principal. It is current on its interest, therefore the bank (probably) holds the note at par. The company is trapped, the bank won't recognize a loss and let it the company restructure and it has no excess cash to do anything. The bank won't refinance the company because it won't meet current guidelins, so there it sits, as zombified as anything John Carpenter ever put in a movie.
In cycles past, the companies would have been restructured, the bank would have taken a hit and post restructuring company would be getting healthy again....
interesting to see all the comments that got junked in this thread - seems that anyone with a realistic perspective on small business today got junked ...
makes me think the junker is a govt shill or a moron
stupid CAPTCHA.
Must have got a correct answer that wouldn't take because it had 3 numbers, or 2 numbers with a negative sign
I've owned and run "small" business for the last 25 years - never had a job. Got crushed when the economy tanked 2007/8. Stripped our business from a high of 22 employees back then to 6 now in a smaller office. Last year revenue was up 60% on year before but we are still crushed by trade debt incurred during the slow down. We're hiring but only sales people who we know will add $$$ to the bottom line. Everyone else is part time or sub contracted. Funny thing is that young folk (in their 20s) don't want to sell and don't have the social skills to be effective sales people. They all want to create. So who is going to sell what they create???
A new Apple RoboSales app?
"So who is going to sell what they create???"
China?
Nice to see that you're screwing people over with PT/contracting, for it's a shame that contracting law doesn't favor the person who does the work. They could use a bit more even odds against your attempt at disposability.
That, and people generally don't have the desire to gut their morality and become a saleswhore.
never seen such govt propaganda bull shi....poop.. crap obamajoke ads before the superbowl this year. They in govt know we are a stones throw from egypt riots in the states and they know it. suck on that obamapuppet
"They in govt know we are a stones throw from egypt riots in the states"
Nah. The UK's MI5 maxim is that any society is "four meals away from anarchy." The breadbasket of the world has a ways to go for that to happen, although in a catastrophic economic collapse it could happen in very short order due to a food infrastructure collapse.
Here's an easy way to test this hypothesis: Cut off food stamps or unemployment.
Not that I'm recommending such a step, since it's genocidal, but I think we're closer than White Guys Typing on a Keyboard think we are.
It's what happens when one spills caviar and champaign between the keys.
It gives an Ivory tower micro view, like looking through the wrong end of the binoculars.
I'm generally bearish ( to the suffering of my equity portfolio since last Sept)
however I deal with several hundred small business owners in the NYC tristate area on a daily basis.
They ARE hiring... they are adding employees for the first time since summer of '08.
My business is picking up the servicing of small businesses, for the first time since June '08.
It has been very Darwinian, we've lost clients due to buyouts/liquidations, but we have also picked up some new blocks of business when our customers were the buyers or majority owner in mergers under duress. At one point in third quarter 2010, our business had declined by a full 40% from the peak in third quarter 2007. Scary times, indeed.. let go of a secretary out of necessity.
The survivors are leaner and meaner, those who actually produce physical things have expanded foreign sales, those who do intellectual property have pushed to regional and international, out of necessity.
G-d help us all as NJ, NY, CT local and state goevrnments attempt to kick the can down the road on the massive gov debt and jack up small biz fees and taxes going forward.
THe first state to default of public sector pensions and medical benefits is going to win the game.
That is my contrarian view from the ZH orthodoxy for the month of Feb 2011.
Regards
i think the 2nd default will win the game.......1st will be crucified , the rest will be too late......
I wrote this column on the introduction of uncertainty by Obama yesterday at Noloachart.com
http://www.nolanchart.com/article8335.html
Today Barack Obama spoke to the Chamber of Commerce. In a speech I am sure he meant to reassure the business leaders of America and instill a level of confidence to begin hiring, had to have done the opposite. Obama's words could probably not be more paralyzing to corporate America had he tried.
Obama spoke of simplifying the corporate tax code in order to be able to lower corporate tax rates. And in order to do so, many loopholes and credits will need to be eliminated.
The uncertainty for business leaders are which ones? What time frames? What business or organization wants to be in the middle of a project, only to find that the assumptions for that project have changed? Consequently, many projects will likely be placed on hold until the uncertainty is resolved.
Obama also introduced a great deal of uncertainty into the areas of research and development. In his State of the Union address, he also mentioned this concept of having the government fund research and development and they the promising discoveries then moving to the private sector.
Obama's rationale is that many of these ideas are money losing propositions. Obama feels he is doing corporate America a favor. Yet he is doing the American people the greatest harm possible. Why?
In the private sector, research which is not providing results is FORCED to end when the money runs out. If the government is providing the research, we know that the money NEVER runs out. We will be on the hook for worthless research for generations to come.
What do you think those in the area of research in corporations are thinking today? Will they soon be competing with the federal government in the hiring of the best and the brightest or researchers? Will they now be competing with the federal government on the very research itself?
Obama also talked about eliminating some of the needless regulations business must deal with. Then, told the audience that much of the regulation is needed. He offered no principles or guidelines as to tell what would be eliminated. The process is guaranteed to be arbitrary, and drawn out.
Finally, Obama could have clarified his position on the Health Care issue in light of two courts declaring it unconstitutional. He chose to defend the purported benefits while leaving business leaders in the dark as to whether they should continue implementing plans that may very well be found unconstitutional when the Supreme Court finally takes the case. And if it is found unconstitutional, the millions spend just to implement will be a total loss.
Businesses want as clear an environment to operate in as possible. There are many decisions that must be made by those running businesses based on what they know. Obama continues to introduce additional variables, paralyzing this very decision making process.
Had Obama had any real world business experience he might understand this. But because he doesn't, many of today's business leaders will do the very opposite that Obama had hoped for. They will delay expanding their businesses until the uncertainties introduced by Obama are clarified.
The confidence Obama had hoped to instill was not. Businesses were left were an even greater level of uncertainty.
Obama's very words will slow the recovery he must be hoping for.
No uncertainty here. Barky and the other polis will feed their masters and squeeze main street. AS I have repeated ad naseum to anyone that will listen, mMy fees are at 1980's levels and I am glad to get the work. Toner cartridges for the color printer are like $1340 to $160 with tax, gas in now $3.50 and legal-sized paper is now $50+/box... My E&) goes up every year.... I am looking to hire at least one of my kids to take over the biz, but I will start them as I/C/s as who knows what they will do if you haev an employee.
I am getting squeezed massively. I work at home and have for many years - no more office rent. My sec's is retired and 1/2 way across the country - she is an IC too.
Look at the CBO b.s. assumptions - taxes and fees are going to go up very fast.
You want certainty and all the good treatment towards businesses delivered on a silver platter to, while you hypocritcally ask non-businessfolk to take less. No certainty will be enough for you until you get things to be feudal with temporary work.
No thank you.
Yep. We know that 99% of the stuff proposed in DC goes nowhere fast. Just introducing more uncertainty.
Small business goldmine: go to govt county daily auctions and purchase foreclosed homes $60-100k under market value. Rehab with new appliances, carpet, paint, plumbing fixtures, etc. The only thing stopping most people is that these properties are paid for in full at the auction, therefore need investors (friends or family) to pool funds. But the people doing this in LA and ventura county California are clearing $30-50k PER MONTH!!!
Could you loan me the money? My credit rating is 800...thats negative 800:>)
Switched from a c-corp to a sole prop recently. Screw all those fees and taxes.
Think about people who lose their job and decide to stay home and take care of their kids instead. They've not only lost their job, but whomever they were employing for child-care lost their job too. But the BLS only counts one job lost, since the stay-at-home parent now is no longer considered in the labor force. Add to that all the assumptions of small business being created that they "can't track" which pads the numbers, and it is an utter farce that we have TV pundits running around in celebration over "9% unemployment"
Not sure that that sentiment will be carried on here as well - given that there are some who complain about the large amount of unemployed, but do everything to maintain or increase that number.
Along with all of the impediments listed is another. Many small businesses use the casa as collateral for business loans.
e.g. (McNews) http://www.usatoday.com/money/economy/housing/2011-02-08-1Amercedcalif08...
- Ned
Dudes, this article would really have me worried, except I found out earlier that Wal-Mart is the embodiment of economic stimulus. Close call, huh?
Many comments about regulations stiffling business. Obama had a pow-wow with big bizz the other day and similar complaints.
These regulations were intended for the safety and security of workers and the environment. I'm sure things could be improved, but I hope we are not looking forward to going back to the sweatshops of the 1800's. These things are well intentioned.
We cannot compete with economies that do not have our progressive standards. Small or large business, it all trickles down. I just wish that our leaders would address this head on instead of coming up with more and more BS stimulus ideas that defy economic logic.
Just "F" the gov't - who needs them for protection? Ditch the military - we've got the Atlantic and Pacific oceans and Canada and Mexico; if the missiles start coming, well so be it, our military couldn't even intercept slow-ass airliners on 9/11, good luck with missiles! On the bright side, this gov't cannot continue to exist in the form it is today...
"Everyone who buys into the myth and pays absurdly high rents, junk fees and healthcare insurance will be ground down and bled dry...Small business can't afford to believe in myths and fantasies. They are dealing with the harsh reality of adapt or die."
That sounds like the American Family/Household. Those "old salts" (like me) that have a real job and pay the mortgage, insurance premiums, taxes, fees, etc. - are being ground down and bled dry NOW.
I was at City offices the other day - this hot little asian lady wanted to start an home-based internut business. She had to fill out an "occupational" something or other that required teh landlord to sign (good luck with that) and also had to apply for a business license. Where I live, the business tax is like .7%. I pay my kids via 1099s to do work for me in the biz and teh City came after them for Business Licenses and taxes. I trade through an LLC and every year they call me to try to hit me for "business taxes."
Cannot wait to wade through the $600+ reg for 1099s - what a fucking nightmare.
Paying the kids under the table might be a better option.
Or just gift them up to $10,000 a year. I believe the IRS still allows that. And if it's a gift, the city can't grab a chunk.
I don't have a business. It's just a hobby, and I never make any money. And that's how I like it.
$13k/year/individual/individual receiving: http://www.irs.gov/businesses/small/article/0,,id=108139,00.html
Good point.
Check with your accountant - I read somewhere that you can pay your kids under 18 yo w/o paying all the taxes on them - other than income taxes of course.
I believe the $600 and up 1099 requirement is being dumped: http://westernfarmpress.com/government/senate-amendment-repeals-burdenso...
You're not entitled to be the Almighty just because you're someone with a business.
1099 reg was repealed a week ago thank the republicans for that, one of the very few things they got right so far this session..
Buy silver, Ishit, and Chevy Volts. Don't say I didn't warn you.
http://thecivillibertarian.blogspot.com/2011/02/its-on-like-donkey-kong....
Job? Wtf is that? Is that one of those situations where you go to some designated place at some predetermined time and take a bunch of shit from other people. Not for me, I'm out. Like Kramer in the self love episode.
State and local Governments didnt see this coming, as they believed
1.People will never stop paying their Mortgages and walk away from them (property taxes)
2.Small Business will never close up and give up the revenues (sales taxes and gains tax)
Yup. And they are just as big a pigs as the Feds. Maybe even more so. I am hearing everyday people starting to complain about fees, taxes, etc going up to support bloated local gov. These aren't faceless people working for the Feds in DC. You see your librarians, teachers, cops, street cleaners, etc. all the time. They live on your block. Real resentment builds up when families are suffering and the pig neighbors are taking month long vacations to South America and ready to retire at 80+% of their last salary at age 50 and have gold plated insurance and bennies.
In a related tangent. Some folks are afraid to retire. You do not know if they are gonna pay SS, cut your SS, means test it, and then if they raise taxes through the roof and medical expenses keep piling up, you might have to go back to work after your expiration date. I thought I had enough to retire in 2000 - wow, how did those interest rate and yield assumptions on investments work? That's scary.
This is an entertaining article, and there is a lot of truth in it. A mid-sized tech company in 2008 created a Plan A for if McCain won and a Plan B for if Obama won. After the election they implemented Plan B, which consisted of laying off their entire US manufacturing force and moving production to Mexico. Obama added to the jobs devestation just by getting elected.
Congratulations to that company for contributing to the unemployment rate. One can only hope there's an administration that takes some of these people to task for moving offshore. Preferably in a manner that repatriates assets, and returns production to the US with someone more willing to not cause more trouble.
If you contribute to the problem, you're not part of the solution; you're fair game as long as you wish to be part of the problem.
... Shanghai, Egypt (now shut down in our case, can you spell 'force majeure'), Djkarta, ...
I don't mind Obama, but having him tell me to hire is laughable. The new small business model was figured out on Living Color by the Wayans brothers in the 80's
http://www.youtube.com/watch?v=Jpu5_3qk4KM
Can't you see? It was part of the grand plan all along. And it couldn't have gone better.
Most of today's monetary policy, which governs the Fed's actions, was designed in response to 1970s stagflation. That phenom and the world political climate that it occurred in scared the living bejesus out of TPTB. So 1980s policies were designed with that in mind. The fundamental question boiled down to this: how can we print money and not have inflation? The idea was to create overcapacity on the supply side through tax incentives (to business, not the middle class) and direct subsidies (to big oil and big agriculture especially). On the other side, offshoring of jobs and industries was an official policy to keep wages and incomes from inflating. Chimerica was growing up. And the service sector was supposed to make up the slack as we were going to become a nation of 'knowledge capital'. Another big piece of the puzzle was to allow privatizing public companies with private equity in order to do the dirty work of downsizing, offshoring and union busting.
Those policies have been followed for 30 years. And in many respects they succeeded, but in so doing they've gutted America's economy. Offshoring and downsizing sure played a big part. And overcapacity in some areas eventually had deflationary effects. Real incomes haven't moved much. And "tax cuts" were never a reality for the middle class. Finally, rather than cutting the Federal budget, which should have been the true goal, it was drastically increased. "Deficits don't matter" was believed and applied.
But many politicians want you believing the myth that if only we pursued these policies even more aggressively everything would be fine. They call it 'getting back to our roots'. But they don't want to face the fact that where we are today didn't just happen overnight.
Three things that need to be killed on the spot if there is to be a recovery. The first law of holes is to stop digging, and that isn't limited to government.
Fast track free trade agreements and turning a blind eye to illegal immigration are some examples of how we went off the deep end, no?
I owned (past tense) a Union Construction business in Chicago up until the end of 2010.
Had a high of 42 employees total including office staff (during peak construction in the summer 2009)
The numbers in 2009 are self explanatory.
Here are (1 carpenter) "Union" costs 2009
Hourly wage $40.77 per hour
Union fringe $20.32 per hour
FICA $ 3.12 per hour
Sut/Fut $ 3.28 per hour
Workers Comp $ 6.24 per hour
General liability $ .63 per hour
Total Burden $ 74.36 per hour
My overhead has went from 8% last year 2009 to over 22 % this year 2010 because of the drop in revenues.
So $74.36 x 22% OH = $16.36 per hour
Total Burden $74.36
Overhead $16.36
Total cost $90.72 per hour
$90.72 x 8 hpd x 5 dpw x 52 wpy =
$188,697.60 per year to employ (1) union carpenter and remember this does not include any profit
Try selling one (1) Union Carpenter for a 10% margin at over $207,594.00 a year (2010)
These numbers are from 2009 since then they (unions) have had a raise June 1, 2010 and will recieve another raise this June 1, 2011. Anyone in business knows that your Workers comp/GL is based on your employees income.
Those costs in 2011 will be over $103.00 per hour with no profit. $103 x 40 x 52 = $214,240.00 to employ 1 Guy for 1 year with no profit included.
Its not like you can bargain with the Unions so I told them to go f%ck themselves and sold in late 2010.
Good luck Biatchez ........................!
+90.72
Its unreal! I don't know how businesses can even stay in business.
They aren't
Rent-seeking.
Where is sethstorm to whine about you killing jobs??? As long as you make enough to pay the union rats, he don't give 2 shits whether you make a profit or not.
This doesn't appear to be a case of pure loss, but simply a case of handing the business over to someone else.
What you fail to realize is that it's not a union issue anymore. That sorta ended in July 1981 with a huge rewrite in how business and non-business individuals treated each other.
What you also fail to realize is that by not hiring(or by moving it out of the US), you have done two things:
"painted a larger target on yourself"
Care to elaborate?
Sure.
By contributing to the unemployment rate and affecting people who are not the government, one would have attracted more attention by the government - through the complaints of those experiencing the actual harm. Your problems have now multipled since it is only a function of time before a bureaucrat will act.
The bigger question is, why is it that such measures seem to always miss the government, but always seem to fall consistently on those outside it - the ones that get laid off, or converted into less stable employment?
The problem for you is that they're still around, just that you're not holding the bag.
This piece also illustrates why it makes little sense to prop up the price of commercial real estate held by big banks. CRE and TBTF banks not only got caught up in the real estate fraud of the past decade, but they also have missed the structural trend change of how business will be done in an electronic world.
Until we can start building delivery trucks in our garage, we've got a wealth creation issue in our electronic world.
Sure, I love working from home on my non-business ventures. It's just me and a computerized desk in the bedroom.
Service works okay from home, but service doesn't provide the kind of wealth for the macro economy that industrial production provides. At best, service facilitates production of wealth by heavier forms of industry.
So the CRE and those other big boxes have a place for wealth creation in our future. Assuming we have a future. And assuming they're not all filled with more stores.
Otherwise, you just end up with an economy with you mowing my lawn in exchange for me cutting your hair (badly).
And somebody still has to hunt for buffalo, and gather berries and gasoline for both of us.
+1000.
While barter and evasion might function for pure survival, it is hardly a way for a large scale of people to prosper.
200K plus union carpenters are a way for a large scale of people to prosper, lol...
lol indeed. That's a kneeslapper.
Carpenters are part of the solution, union or no. And auto workers, UAW or not. And truck drivers, Teamsters or indy.
People forming sleazy unions to stand up against groups of slimy corporate monopolists isn't the heart of the problem here. The problem is theft of capital by organized, non-producing thieves with government complicity.
When people work, it creates wealth to permit whatever lifestyle that wealth can bring. People stealing that wealth from the workers and their employers, brings nothing but short term profits and economic collapse.
That bus has reached the barn. Everybody off. Mind that cliff at the end of the sidewalk.
For once, someone is willing to suggest a more reasonable alternative.
The only people who are feeling the economic recovery are the ones who are either direct or indirect beneficiaries of the bailouts or QE. They are the top few % of the population whereas the rest of the population are battered down with unemployment, foreclosures and exhorbitant cost of living because of rising food and energy prices.
Hence it does not make sense for the companies to either hire people or expand their businesses as only the rich people on their own cannot create enough demand to replace the rest of the population.
http://www.marketoracle.co.uk/Article24581.html
Excuse me while I scream the obvious:
THERE IS NO FUCKING ECONOMIC RECOVERY.
Economic Recovery is nothing but a fiction you only see on TV. It's like American Idol, but you don't get to vote.
Small biz has downsized to micro-biz in the last 10 years. Many of us - one person operation - are so small the government doesn't notice we pay no income tax thanks to their absurd tax code.
Math question cannot be longer than 3 characters but is currently 5 characters long.
Now what? -1295 is the answer.
Wow! For once I got the last word.