September 21, 2014

What Really Needs to Happen to Create Jobs?

The most recent June employment figures were disappointing, to say the least. But does the blame for feeble job growth lie with business, or with government? Currently, while both sides seem to agree on a lot (at least in theory), there’s a lot of finger-pointing going on and not a lot of action.

The Jobs for America Summit 2011, held at the U.S. Chamber of Commerce earlier this month, illustrates the divide. The U.S. Chamber of Commerce recently released a survey of its members that puts the blame for lackluster job growth at Washington’s feet. The vast majority (84 percent) of surveyed members think the U.S. economy is on the wrong track, and 79 percent believe Washington should get out of the way of small businesses, instead of offering a helping hand (14 percent).

downtrodden businessman

At the Jobs Summit, CNNMoney.com reported, Chamber President and CEO Thomas Donohue explained the organization’s ideas for helping create jobs. Among the policies the Chamber supports are:

  • Passing pending free trade agreements with South Korea, Colombia, and Panama
  • Reforming current visa rules so it would be easier to hire skilled workers and others from overseas
  • Invest in infrastructure
  • Boost domestic energy production
  • Promote travel and tourism
  • Easing government regulations, in particular the permitting of new projects

OK, so what does Washington have to say about job creation? The President’s Jobs and Competitiveness Council, comprised of 26 private-sector leaders led by GE Chairman and CEO Jeffrey Immelt, has been tasked with coming up with ideas to accelerate job growth and make the country more competitive. In June, Immelt co-authored an op-ed piece in The Wall Street Journal laying out the recommendations the Council had come up with in its first 90 days:

  • Train workers for today’s open jobs. “The private sector must quickly form partnerships with community colleges, vocational schools and others to match career training with real-world hiring needs,” Immelt wrote.
  • Facilitate small-business loans.
  • Streamline permitting so job-creating construction and infrastructure projects can move forward.
  • Boost jobs in travel and tourism.
  • Put construction workers back to work by having both public and private sector employers step up to make buildings more energy-efficient.

Long-term recommendations, which the Council will be fleshing out in the next 90 days, include:

  • Focusing on fast-growth companies and small business
  • Making America more attractive place for high-tech services and manufacturing jobs. Accelerating foreign direct investment in the U.S.
  • Improving infrastructure
  • Visa reform to enable more high-skilled immigration

I see a fair amount of overlap here, don’t you? In fact, the White House issued an executive order in July requiring agencies to remove outdated regulations that are hampering small businesses.

So what’s holding things back? At the Summit, CNNMoney reports, Immelt took business to task for failure to act:

“The people who are part of the business sector, the people in this room, have got to stop complaining about government and get some action underway. There’s no excuse today for lack of leadership. We all need to be part of the solution.”

But Donohue fired back. “Can you blame these businesses?” he told the audience. “They don’t know what’s going to hit them next, and that’s what worries them the most.” Almost half of all respondents to the Chamber survey said uncertainty about U.S. economy is one of the top three important challenges facing their businesses, and 55 percent cited it as their biggest obstacle to hiring.

What worries me the most? I see a whole lot of recommending and not a lot of action. Small businesses are all about action, and I think it’s time for businesses – large and small – to start moving forward again.

8 Comments ▼

Rieva Lesonsky


Rieva Lesonsky Rieva Lesonsky is a staff writer for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow her on Google+ and visit her blog, SmallBizDaily, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

8 Reactions

  1. This is a good list – mostly simple things that add up to a comprehensive effort. While this should have been done in 2008 there’s no reason we can’t get it moving now.

    I do think that the economic condition is so severe that we should all make a point of brainstorming some more radical ideas as well. But I’m sure there are many more good ideas to help achieve the restructuring that is needed.

  2. Great post, Rieva…

    I was talking to my wife about this very topic, tonight.

    She asked me what I think the President should do to create more jobs. We both agreed that Washington knows how to create gov. jobs; but we don’t need anymore of those.

    I had an idea, and I’m going to get a little political here;

    Since it’s obvious that most of the folks on the Right are protecting wealthy Americans with the goofy “no new taxes” piece of wood pulp they signed, why not add this to the end of said document…kind of an addendum of sorts;

    “We’ll stick by our no new taxes” pledge, but you have to help us a little here. Do you think you could spend a little of your cash
    and do some hiring? We could use a million or so new jobs right about now.”

    The ideas that you mentioned above are good. We need business owners to open up their checkbooks, and increase their payrolls.

    Now.

    The Franchise King®

  3. This is also a common dinnertime topic at our home (my toddler will either hate finance or be an amazing economist!).

    Rieva you make great points, as does Joel, however I also think you have missed a few critical issues.

    Small businesses, especially if they are going to hire FTE’s and push growth, need to know they have access to either capital or credit. Many businesses are still feeling the sting of reduced or discontinued credit lines and lending requirements that even Bill Gates might not meet.

    I don’t care which side of the aisle you sit on, the debt ceiling, runaway spending and taxation are ALL issues facing our nation. With Moody’s threatening to downgrade us, and everybody in DC refusing to cry uncle in a ridiculous game of chicken, the global financial markets are very worried.

    That translates to banks sitting on capital, which of course reduces a small biz owners options in getting the liquidity they need to grow. Small business owners are correctly wary of getting caught out again.

    I DO think small business owners can be the foundation for recovery. However they need to be smarter than our government about spending. I would recommend using contract employees and outsourcing for your initial growth, then if things go bad that expense can end immediately. If they go well, simply hire them on full time. Consider leasing new equipment vs. a purchase. Secure ALL necessary capital for a new project beforehand and those with seasonal needs should have at least two sources for Lines of Credit.

  4. I totally agree with Joel on the wealthy helping out with hiring (I too, said the same thing at dinner the other night!) and I also agree with Nicole about freeing up $ for small businesses as well as her other strategies.

    It’s very frustrating for all. Eric is right too. We need to combine traditional approaches with radical new ideas to make progress.

    Having worked in community college administration providing job training to the business community, I know what it takes to make it happen quickly. Colleges can contract consultants who are experts in career fields and encourage businesses to ramp up staff to be trained. It’s an investment in their future. Funding may still be available in some states for grants to assist with the expense.

  5. Thanks Erik, Joel, Nicole and Helen for your thoughtful input. I agree with nearly everything you all said. I’m a little fed up with everyone saying “small businesses should be hiring” and ignoring the fact that many big corporations are enjoying profitable years and not doing their share.

    And that includes the banks. This is a 2-fold problem. We need more money flowing from American consumers to businesses, and we need more money (in the form of loans and credit lines)flowing from the banks to small businesses.

    C’mon everyone–do YOUR share.

  6. Rieva,

    The recommendations by the chamber are all well & good but… we really need some concrete work done on the following:

    1. Get our fiscal house in order. Small business people are very concerned about our economic future. Get back down to a federal budget at 18% of GDP.

    2. Put an immediate “hold” on all regulatory edicts. Freeze them now.

    3. Tell the world that taxes will not be raised.

    4. Require that all politicians be certified that they took, and passed a simple economics 101 course.

    Regarding Mr. Immelt, I think the President forgot to tell him that he wants jobs created in the USA, not China.

  7. What are Jeff Immelt and Barack Obama doing telling us how to create jobs? And how dare people tell companies they need to do their FAIR SHARE by hiring people with no ability to make money off that hire, as if they are charities?! Does anybody understand capitalism anymore? Absolutely ludicrous statement.

    Business looks at the economic climate and asks if it’s the right time to hire. Then they do or don’t. It’s that simple. They’re not charities, or government. They are in business to make money, not drive themselves out of business by trying to be charitable.

    And big business hiring isn’t the answer anyway. Immelt’s company, GE, made billions in profit last year and didn’t pay a dime in taxes. Obama should never have someone like that as an advisor. And if every business in America like Immelts, with over 500 employees (there are only 17,000 of them in the entire country) hired 100 people each immediately and grew by 20% overnight, it wouldn’t make a dent in unemployment.

    And Obama has never run a business or even an administration until they plopped him in the White House. He may be an academic genius, but wisdom only comes from experience, and not only does he have exactly NONE, he’s made sure to surround himself almost exclusively with other academics with none as well. Is that the decision making of a clear thinking leader? Then they have meeting after meeting to appear to be solving the issue, because that’s how academics solve issues – they have meetings and talk.

    But this is typical. Giant government, giant business, and giant banks get us into another recession, then turn around and look at small business and tell us to get them out of it, then they don’t invite us to the table to tell them how to do it. They’re big and we’re small, so they obviously know better than we.

    They’re right to ask us to do it, because they can’t and never could. The #1 job growth sector is businesses from 1-9 employes and #2 is 10-19 employees. That’s 28 million businesses. If only 15% of them added just one employee, there would be 5,600,000 new jobs and we would be instantly out of the recession. Big business can’t even begin to make a dent in it. But government has done nothing to solve the problem except throw trillions at hiring more government workers. The answer is renewed access to capital (fyi – NFIB’s members are older established businesses so they say it’s more access to customers, but new businesses can’t get started and new businesses can’t get the credit they need, and that’s what is holding up NFIB’s customers.) It’s capital, capital, capital.

    The giant government gave giant businesses and giant banks a giant amount of money in just a few days in 2008, and since then government has done nothing in comparison to help small business, the real engine of recovery (the tax breaks helped corporations with 100-500 employees, not those with 1-19).

    They tell the giant banks and the giant corporations what their CEOs can make (and rightly so, since they’re living on government handouts), then the government tells the small business owner they can’t tell the banks to return to just normal (not loose) lending standards. Why? The giant banks are terrified of the giant government’s auditors – they aren’t about to take on any small business debt right now until the giant government lightens up, too.

    The innuendo in this article is that government is working with business to get this done. But look at reality.

    The giant government gave their giant business friends nearly a trillion in bailouts and paid no attention to small business in the process.

    The 19 largest banks who were deemed TOO BIG TO FAIL in early 2009 now control a BIGGER percentage of the market than they did back then. Does that sound like the right solution from our government?

    The giant banks who got hundreds of billions in handouts in only a few days rightfully sat on the cash because the giant government is breathing down their backs saying don’t loosen your lending standards.

    The giant government, giant corporations and giant banks can huff and puff all day long. but until NEWER businesses have REASONABLE access to cash, this thing is going on for a long time.

    The author wants to draw some positive corollary between the two lists, but it’s not the one she wants to draw. The lists are clear – most of the solutions are promote small business and get government out of the way by changing the way the relate to us (regulations, etc.). What are they doing? Talking amongst themselves – giant government, giant business and giant banks – all in their infinite wisdom telling us what to our FAIR SHARE, without including us in the solution.

    The solution:
    1) A return to a reasonable predictability of the future – this is 100% in the hands of the government and is not being pushed forward.
    2) A return to REASONABLE lending standards. It is the government who is breathing down the backs of the bankers keeping them from lending. This is 100% in the government’s hands.
    3) Reducing regulations that hurt small business, and leave the ones that limit big business in place (or expand them). This is 100% on the plate of the government.

    What a thoroughly insulting and fully political statement by Immelt: that businesses need to -stop complaining about government and get some action underway-. That’s no different than asking us to simply and magically fart golden eggs, and the business man in him knows it. Action will come after government gives us predictability, reasonable lending standards, and decent, stable regulations.

  8. By the way – I’m sitting in the DR Congo in Africa as I read all this whining from the government and Immelt (who paid no taxes last year) about me doing my FAIR SHARE. I’m here making a personal mid-six figure investment that will create hundreds of jobs right away and likely a few thousand in the next three years – all DR Congo jobs, because my assessment is that this wild west environment is still a much safer place to put my money right now than they U.S. economy. The Ministers of Commerce, Agriculture, Mining and Justice have been very accommodating, and the President of ANAPI, the Congo government’s Investment arm, has shown us great stability.

    Meanwhile I just got an email from one of my clients back home who has just been run out of business by a new State Dept. regulation that requires she leave $500,000 in a bank untouched for two years, something the DR Congo would never do to me. This works great for the big business owners who will be able to take up the clients she used to have, but has just put a few thousand business owners like her out of business in the sweep of one pen. And of course three weeks of requests to the SBA’s Office of Advocacy has not netted so much as a returned email saying they’re not interested in helping.

    This is how our government is working to help small business owners flourish right now. I emailed my Chief Results Office and asked her to send the story out to the 500+ local and national new agencies in our database today. Would have been nice to just have the supposed small business advocates inside the government solve this quietly among themselves.

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