Job creation 101

[Garam_Masala]

3 out of 4 new jobs are created by small businesses! So where should the
money be spent to get most bang for the buck? Bingo! Small businesses!!!!

Instead where has been most of the tax payer money spent?
On bailing out BIG corporations such as GM, AIG, Bank of America etc.
Those big corporations are bloated and corrupt. Let them wither on the vine
if they can't operate efficiently.

What President Obama and his economic team should be doing is helping
small businesses via accelerated depreciation of capital goods, tax credit
for hiring and training new employees, tax reduction on profits under $5
million so the business can invest that money in expansion, and tax credit
(as opposed to tax deduction currently) for covering employees health insurance.

Jobs will explode if this is done and 2012 will be a democratic landslide.
And they will be LONG LASTING jobs, not a ONE time project jobs.

Creating Government jobs is not enough. Those jobs do not produce anything
marketable, just takes money via taxes from all those who work for a living
and produce something. Besides government run entities such as Post Office
do provide a service but run chronically at losses.

Also Forget spending money on 1 time work projects since that money has to
be borrowed from China and we end up with the loan+interest for ever since
there is no surplus to pay off any loans. They just repaved my street which
was unnecessary since there was not a single pot hole anywhere. But the sign
said "stimulus money at work". Yeah right, a ONE time work project and money
owed to China for ever! So sad!!

[Clio the Leo]

1. "The original stimulus proposal had included a tax credit for employers that hire new workers...."

As the labor market deteriorates, Obama administration officials and policy makers are weighing further action to boost hiring and expand federal safety nets. Although the administration has balked at calling any new measures part of a new stimulus package, these moves will require fresh legislation and more money.

Here's what's on the table:

<snip>

Employer tax credit. The original stimulus proposal had included a tax credit for employers that hire new workers, but it didn't make the final cut. Such a credit would give employers a tax break if they increase their payrolls -- a policy designed to get companies over their reluctance to start hiring again. Critics say it could be difficult to implement.

http://online.wsj.com/article/SB125581285879092281.html

I dont know that I'd use the phrase "deteriorates" and the fact that this is getting a lot of support with the GOP in Congress is throwing up a big red flag IMO.

[Garam_Masala]

8. I like that initiative by the adminstration

GOP needs to stop stone walling anything which helps the employer.

[Skittles]

2. KEEP THE JOBS THAT ARE HERE

STOP PIMPING THEM OFF TO THE LOWEST OVERSEAS PIECE OF SHITS

[Garam_Masala]

5. Exactly how will you stop jobs moving abroad?

How will you force any company from closing plants here and moving to cheap labor countries?
Increase Tariffs on imported goods? That will stop imports but then you will pay a lot more
for shoddy goods since the competition will be eliminated. So the local jobs will may be
protected but the paychecks won't buy much. Give me one example where high tariffs on imported
goods have benefited either the workers or consumers.

I think the only solution we have is to encourage small companies to stay in business here
by making them more competitive with foreign manufacturers via tax credits for hiring & training
workers and tax credits for providing them healthcare.

Nut again my main point is.......stop wasting money on bailing out large corporations.

[Skittles]

9. no tax breaks for corporations pimping off jobs

fuck them all

[Garam_Masala]

10. Then the job drain will continue unabated...

I want tax breaks capped off at $5 Million. No tax breaks for large corporations since they
don't create many jobs any ways.

[doc03]

3. Is that you George Will? n/t

[Garam_Masala]

6. Nope but I am better looking lol n/t

[rucky]

4. Abandoned factories + laid-off factory workers

anyone see an opportunity here?

let me rephrase. any lenders (govt or private) see an opportunity here?

[Garam_Masala]

7. The opportunity is there only if...

the buyers whether private or public can compete in the market place.
Those plants would be open if they could compete. Tax credits for
retaining and hiring workers and providing them with health insurance
might have made them survive.

Soviet Union for example protected jobs for workers and guaranteed every one
a job. Imports were severely restricted. And look what happened! Stores were
empty, people had very low standard of living, and the country imploded.

[TheKentuckian]

11. No amount of tax breaks will fix anything here because there is nothing we can

do to compete with people operating in a completely different financial reality other than to either artificially raise things like cost of living and increase regulation abroad or by destroying our own standard of living to the point of a level playing field.

Your premise is flawed, your solutions toothless, and your view enslaved to free trade nonsense. You realize we export raw materials and then buy back junk as finished products? We are not the Soviet Union, we have no resource issues here. We can certainly not only produce the products and services we want and need but we also have a system that allows choices through competition. Properly regulated we have a decent market system that could work effectively as a closed system if required, which it isn't. We should be competing with other 1st world nations and top economies rather than expecting citizens to live off pennies a day in order to go toe to toe with Somalia or whatever destinations are set for the old rape, plunder, and move along of unfettered capitalism.

[Garam_Masala]

14. I hope you caught on to my distinction between

Big business & Small business.

I was an employee at both types of businesses. The big businesses are
bureaucratic, bloated, slow to innovation, riddled with waste, have money
to influence politicians via campaign contributions and lobbyists.

Small business I worked for was missing the long chain of bosses so it
could stop unprofitable processes quickly. Workers had much better
individual recognition for jobs well done. The only disadvantage the
small business has is lack of deep pockets. So by passing laws to favor
small businesses many more jobs will be created than bailing out AIG,
GM and Big Banks.

[mkultra]

16. most post ression jobs come from recalls of workers

[TheKentuckian]

12. Hell, this entire OP is simpleminded

Jobs 101 is there has to be some good or service rendered. You can't just give tax credits and pray. There is no hope or reason to resume the 70% service economy. We will have to actually produce something and provide value. There is no infrastructure in place to get there. We can't simply resume what we were doing before (quite poorly and counter productively, I must add).

You are nothing but a shill for the same failed mentality and systems that put us here.

[Garam_Masala]

13. What I am advocating has never been tried before

so how can you say it has failed?

No small business was ever given tax CREDIT for
buying health insurance for their employees.

No small business with profits under $5 million was given any special tax rates.

No small business was ever given tax CREDITS for hiring and training new employees.

It is a mistake to label something a failure before giving it a try.

Let me ask you one question: If unemployment keeps increasing during next 12 months,
what changes in economic policy should be made by the president?

[TheKentuckian]

19. Okay, first sorry that I got harsh. I have precious little belief in even the basic concepts of

laissez faire which I felt you were essentially pushing while simply moving the focus. I still think that is the basic idea but you hadn't done anything to be put on blast about as of yet.

My premise is that we cannot blow the balloon back up in a sustainable fashion AND that there is no immediate opportunity to transition so I'd more or less do everything you don't suggest.

First and foremost, energy must be dealt with for us to have any self determination as a country. In my opinion nothing really trumps this very basic idea. I would do whatever it takes to transition away from carbon and would argue that while we'd like further advancements from solar, tidal, and wind collection, that such concerns are very secondary to getting a handle on this and the real key from a technological is really storage. So, I'd push for a Manhattan Project type effort on power storage. While that effort is in high gear I'd create temporary access to income by doing what we can do which is to build our new grid, rebuild our decrepit sewer system, broadband internet to every spot in the country, build state of the art/cutting edge high speed rail all over the nation while transitioning us to smarter, lighter, and frugally produced personal vehicles like scooters and more or less go carts.

My trains would likely include cars that could carry these lightweight personal vehicles at an extra cost. The goal of all of this would be to drastically reduce fuel/energy consumption while maintaining our iconic freedom of movement while laying down part of the foundation tomorrow's commerce infrastructure.

I'd really expand what we now know as basic education which would now include both a liberal arts undergrad as well as at least a two year technical degree which I hope would lay the foundation for each and every citizen to have a deep reservoir of general knowledge and flexible minds and at least one needed hands on skillset.

I would seriously consider basic subsistence levels of food stamps for virtually the entire population which will keep the poor fed and act as direct stimulus for those doing a little better.
I would like to also explore something to give people basic housing as a right that would clear the massive inventory of empty homes. Perhaps a "homesteaders" type act that converts large properties into co-op style apartments that pay a means tested rent/mortgage to Uncle Sam to pay for these properties over time.

I would go "protectionist" stance or certainly a fair trade model. There would be no more cheap crap to buy, which would destroy the Wal-Mart model, which in turn would free up a lot more space for the entrepreneurial spirit to flourish. Once again people could make a decent living operating stores of all kinds (albeit a short and medium term thing due to technological advancements) and there would again be value in repairing things.
We have traded valuable family businesses for minimum wage jobs in order to save a few bucks at the register and that is stupid, in my opinion.

Finally, (or at least for the moment) I would get at least 5% of GNP in non-energy R&D, including a substantial increase to manned space exploration. The technologies required to get people to Mars (just as an example) and more so to survive there and return would help to push the curve in dramatic ways.

Don't get me wrong. I don't have any problem with a small business stimulus program and actually support one but I don't believe that just getting the risk takers money will get us out of this mess because there is no real framework they can operate in that makes a real difference over the long term and only minimal impact in the short term until there is space in the market, customers have resources, and companies have purpose.

I have no problem propping up what we have some so folks can make payroll and hire people they might need but such an effort to my mind is a ban aid rather than the invasive surgery required. I understand the logic and support it in reasonable perspective but the problem is astronomically bigger than tight credit and a need for a short term boost for small business.

I strongly suggest that we are in the midst of a paradigm shift here rather than a down turn in the normal cycle. I think it is highly probable that over the long term there will never be the levels of employment and hours worked we are familiar with is over and we need to start the long journey towards integrating that reality with our day to day existence. Business doesn't hire people for any other reason than greatest need and never will while profit is a primary motive and reality is that total man hours to run this civilization are pretty minimal and will continue to decrease over time until only a very few people will actually need to do anything.

We need to not only update failed and irrelevant systems but also start to wind down the connection to what we do for money and its place in our lives because in the next 2-3 generations the 5, 10, 15, or at most 20 hours each person will need to contribute just won't be life's centerpiece anymore while at the same time diversifying our most important resources the human mind and spirit so that we are as prepared as possible for challenges beyond our experiences and ability to predict.

[Garam_Masala]

23. Thanks for a thoughtful post!

Many good points you make!

[mkultra]

15. K&U for made up statistic and welcome to DU.

[Garam_Masala]

24. Actually my estimate was on safe side...

According to this article it is more like 93% of new jobs created by small businesses.

http://www.huffingtonpost.com/fred-hochberg/small-businesses-create-j_b_101601.html

[joeglow3]

17. The ONE thing I like about the Bush tax cuts

Bonus depreciation and accelerated Section 179 deductions did a TON to spur economic growth. As a tax CPA at a public accounting firm, the vast majority of my clients accelerated and increased their spending to take advantage of it. I think you need to expand Section 179 even more, as this is phased out for big companies and benefits only small businesses.

[ieoeja]

18. 1. That is a myth about small businesses creating jobs.

Every politician uses that myth to the point it has become accepted as fact, but it is not.

2. The USPS has been operating at a profit for decades.

3. Government jobs do not "just" take money. Aside from the fact that lots of gov't jobs do produce something -- is a road not a physical, tangible object; and without roads, sewers and for that matter, government protection via laws, etc, wouldn't your private jobs be undoable? -- there are plenty of communities in the United States where most of the private jobs only exist because they have enough government employees paying for their services.

[Garam_Masala]

22. You might want to do some research on your own..it is 93%

a simple google search found this article on creation of NEW jobs
by small companies. If not the small companies then who creates NEW jobs?
Big Companies? Just look at their growth curves. The big ones have very mediocre
growth rates. Almost all growth happens in small and medium companies.

http://www.huffingtonpost.com/fred-hochberg/small-businesses-create-j_b_101601.html

Do you know how many government employees are there in Washington DC alone?
There are literally in hundreds of thousands. I don't think they are building
roads and sewers. Most road building is done by private contractors using tax
dollars filtered through government bureaucrats. Ditto for most public works
projects. My brother-in-law works for the city of Chicago and he does Maintenance
of public parks and sewers. Builds nothing, just maintains them. WHich is just
fine. Just remember it takes tax dollars to support every government activity.

[taught_me_patience]

20. Please cite a source that 2/3 jobs are created by small business

[Garam_Masala]

21. Per Huffington Post article...93% of new jobs created by SMALL

companies! I was going for memory that most NEW jobs are created by small
companies. This article says it is 93%!!!!!!

http://www.huffingtonpost.com/fred-hochberg/small-businesses-create-j_b_101601.html

[quaker bill]

25. First

fully 1/3 of our entire economy is government. So the notion that "small business" creates 3/4 of the jobs is absurd on its face. Secondly, the notion that 93% of new jobs are created by "small business" is not only absurd, but must to be even remotely close to this reality, use a definition of "small business" few would recognize as "small business".

We are not talking little "mom and pops" getting this done. Now if you define "small business" to include corporations with somethng less than a couple thousand employees, you are probably getting close.

Another thing to note, is that as 4 of 5 "small business" startups fail and fold within the first 5 years, "small business" must also consistently be the greatest source of unemployment. If this were not the case, the brilliantly dynamic "small businesses" as much over-glorified by amatuer economists, would have "created" so many jobs by now that we all would have to be filling 5 or 6 of them at the same time just to keep up their demand for new employees.

By the way, government jobs do produce something, unless you consider a more or less ready-to-work educated workforce "nothing". I think the few "small businesses" that do actually make it, benefit considerably from a workforce that can write, add, and subtract, perhaps even multiply and divide, when they walk in the door. Imagine the costs if a business had to train all their staff from scratch. They also fairly well benefit from a secure market place where criminal behavior is somewhat controlled.

As a further aside, virtually all stimulus projects I have seen locally are being constructed by "small businesses", not government employees. Further the supplies to construct them are generally purchased from other "small businesses".

1/3 of our economy comes from government consumption of private sector services, get a clue my friend.

Edited to add:

Another small but not inconsequential note, a considerable number of small businesses are created expressly to sell their services to government. Who "created" the jobs in these cases?

[Garam_Masala]

29. Why don't we then double the government jobs?

It is only 1/3 now according to your figures. If we double it to 2/3 that
would create a surplus of jobs!

The only nagging question would be where will the government get the money to pay all
those employees LOL.

Incidentally I read somewhere long ago there are only 4 wealth producers.

1. Mining
2. Agriculture
3. Manufacturing
4. Creation of marketable intellectual products such as MS Windows, new pharmaceuticals etc

Everything else such as service economy including retailers, accountants,
physicians, lawyers etc can't exist unless there is wealth created.

Please note government is not in that list.

[quaker bill]

35. All economic activity

is wealth producing. I understand the economic school of thought from which you argue, and unfortunately, Milton Friedman became passe' about a year and a half ago, and several decades too late to be helpful. This economic understanding of wealth is sophomoric (eg. opinion held by a "wisened fool").

The actual wealth of a nation vastly exceeds the sum of the physical goods it produces. Further, the reliable production and marketing of these physical goods is entirely dependent on the social infrastructure, much of which is constructed and maintained by government. Stable markets largely free of theft, graft, corruption, and malfeasance are essential to progress in a free market system. A reliable system of distribution (such as the interstate highway system), is also essential. (See China, Russia, Albania, and much of the middle east for comparison) The fact that you may have read something somewhere that omits this fact does not commend the author or line of thought he/she was attempting to express.

In short, I would agree with you, but that would only make both of us wrong.

Now, you can run with your flawed philosophy, or simply look at reality. As always, you get to pick, but I commend reality for your consideration. Basing one's views in reality often requires less medication.

[Enrique]

26. don't forget tort reform

and deporting illegal aliens. :sarcasm:

[Garam_Masala]

27. Tort reform won't create many jobs!

It may reduce the cost of health care slightly but that is off topic.
I would love for you to stay on topic and put in your 3 cents worth on
how you propose to increase NEW jobs.

[Enrique]

28. what about the stimulus that already passed

it had a bunch of tax credits in it. What do you think of those tax credits.

[Garam_Masala]

30. I am all for tax credits only for SMALL businesses

earning under $5 Million. You get the most bang for the buck there.
ALl those Billions given to big banks, Insurance giant AIG, General Motors, etc
have created very few NEW jobs if any.

[Enrique]

31. I'm talking about the stimulus, not the bailout

plenty of tax credits, tax breaks, etc. in the stimulus, some very similar to the ones you are suggesting. What did you think of those, and do you think they have worked?

[Garam_Masala]

34. Like I stated before, stimulus money (or any federal money)

should be spent on creating long lasting jobs. The only way to do
that is to help create a business which can make products or services
which have a market. Spending the money on ONE TIME projects such as
repaving my street does not have any long term benefits towards jobs
creation.

I don't know how much of the stimulus funds were spent on tax credits
to small businesses, but my guess is it was small fraction. I do know
they spent some of that money on retaining teachers and city workers.
That is not a good use of tax payer money. If a city can not produce
enough revenue to support the level of workers then they need to shrink.

If any of the stimulus money was used for tax credits to SMALL businesses
then I commend that whole heartedly.

[jeanpalmer]

32. Before you can propose a solution

seems you must identify the source of the problem. What caused the job losses? What caused the current economic downturn?

Was it the outsourcing of 5 million jobs and the resulting income decline? Was it technological innovation? Was it the loss of high-paying jobs and the substitution of low-paying jobs? Depending on the cause, the proposed solution might be different. For example if outsourcing contributed to job losses, how does a tax credit solve that problem? Why not address the problem of outsourcing directly? When you go to the grocery store, you'll see self checkouts. The store I go to has eight such units with one person supervising all of them. That represents a number of lost jobs that are never coming back. What good would it do to give that grocery store a tax credit to hire people when it doesn't need more employees? Newspapers are in a decline because of the internet, people are being laid off. What good would a tax credit do there?

There's an assumption that if one job is lost to technological innovation, another one will pop up to take its place, the free market will provide. Is that assumption true?

The last economic recovery beginning in 2002 was called the jobless recovery, because it took a long time for jobs to come back. To get those jobs back, the Fed had to lower interests rates to 1% and people had to take on massive debt. That fueled the reovery and created jobs but put people hopelessly in debt, causing a debt bubble and a crash. Obviously, that path was not prudent, and is not available this time.

What about the possibility of a sustained decline in the demand for labor. Basically, machines are being substituted for people, permanently.

It seems to me that policymakers and politicians are uninterested in finding out why we are in the predicament we're in. What caused it? They seem not to have any curiosity. And yet how can you fashion a remedy if you don't know the cause? I can see why they might not want to find out that outsourcing was a big factor. So they put on the blinders, and go back to the only game they know -- print money and run up debt, this time government debt in place of private debt. They're giving the failed system a shot of adrenalin and keeping their fingers crossed that it comes back to life. What a way to solve a problem. It's a sad spectacle.

[Garam_Masala]

33. Many good points you make...

The reasons for job losses are many IMHO...

>> Normal business cycle
>> House prices got much higher than affordabillty and the bubble eventually burst
as it must like every other bubble.
>> Banks were required to lower lending standards causing many more foreclosures than normal

But the most important factor in job losses has been building for many years. It has to do
with giving away our technical knowhow to foreigners. I saw this at first hand! The company
I worked for sold entire engineering and technical knowhow we had accumulated over 60 years
of research and development for a very cheap amount to China. Now the Chinese can manufacture
our machines at a fraction of the cost. They would have needed 60 years or more to get where
we were at. But the CEO's don't give a damn about long term. They only worry about short term.

I am sure this experience has been repeated thousand times over. Americans have invented
almost all critical items such as the airplane, automobile, telephone, transistor, computer,
television....on and on. But we never did a good job of guarding our knowledge.

Now they can manufacture in China and India every single product we can, without having
paid the price to invent it. We are on the way down to their level of standard of living.