Everyday, as I watch the national news, everyone is talking about jobs, jobs, jobs, but small businesses are conspicuously absent from the discussion.
According to the latest U.S. Census Bureau data, small businesses are responsible for creating over 90% of net new U.S. jobs. Independent organizations like the Kauffman Foundation have found that small businesses created virtually 100% of all net new jobs created since 1980. That means Fortune 1000 firms have not created one net new job in America in over thirty years.
The Small Business Administration’s Office of Advocacy points out that small businesses employ over half the private sector workforce, are responsible for over half the gross domestic product and 97.5% of all U.S. exporters. To boot, small businesses also employ at least 43 percent of all high-tech workers and produce 16.5 more times the patents per employee than large patenting firms.
The fact that real unemployment (the U-6) is pushing into the high teens seems to be a pretty good indication that President Obama’s economic polices are a dismal failure.
If President Obama and Congress were serious about creating jobs, it would be simple for them to do; they could support small businesses.
Step one is for the President to keep his campaign promises, starting with his 2008 promise to “end the diversion of small business contracts to corporate giants.”
The Small Business Act, which mandates that 23% of the total value of all federal contracts be awarded to small businesses, is probably the most cost effective economic stimulus and job creation program in U.S. history. Unfortunately, a series of federal investigations conducted since 2003 have found that, in the last decade, hundreds of billions of dollars worth of federal small business contracts have been diverted to the very Fortune 1000 firms that haven’t created one net new job since 1980.
Secondly, President Obama can reinstate the nation’s oldest and most successful federal program for directing infrastructure spending to minority-owned small businesses, which his administration has allowed to be dismantled.
On September 9, 2011, his administration announced final plans to eliminate the Pentagon’s 5% minority-owned small business contracting goal. This means that the nation’s first African American president and first African American attorney general will preside over the elimination of a program that stemmed from the activism of Martin Luther King and historic Civil Rights Act.
President Obama administration just released his proposed FY 2013 budget, which included funding for the Small Business Administration that is less than the SBA budget was over 30 years ago when Ronald Reagan was President— even before you adjust the figures for inflation.
This news comes less than a month after President Obama announced plans to close the SBA by combining the agency with the Department of Commerce. If the consolidation gains approval from Congress, the SBA will cease to exist.
So the third thing the Obama administration and Congress can do to create jobs is stop the President’s proposal to close the Small Business Administration.
The notion that he is going to save 3 billion dollars over a decade by combining the SBA and Commerce is ludicrous. The two federal agencies are diametrically opposed— the commerce department exists to represent the interests of large businesses, the same large businesses that have worked for over 30 years to eliminate the SBA and allow large businesses to hijack every last penny of federal small business contracting dollars.
It’s the same thing that Reagan tried to do when he was in office, and more recently former President George W. Bush – who attempted to starve the agency by slashing the budget.
In the middle of the worst economic downturn in more than 80 years, these anti-small business policies from the Obama administration are the last things we need.
Instead, we need to reopen every SBA office Bush closed, rehire every SBA employee that Bush laid off, quadruple the SBA budget and expand every federal program for small businesses— the nation’s chief job creators— and not eliminate these programs in the guise of saving an infinitesimal 3 billion in a decade.