How Obama Is Hurting Small Business

The president has hung the engine of growth and job-making out to dry.

The Obama administration is recklessly inhibiting the largest creator of employment in our job-shrunken economy—namely small business.

Small firms represent 99.7 percent of all employer firms and have generated most net new jobs over the past 15 years, according to the Small Business Administration. Small firms provide from 60 to 70 percent of all new jobs, said Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council (SB&EC), representing 100,000 small firms and 250,000 entrepreneurs.

A new survey of 100,000 members of the Small Business & Entrepreneurship Council, according to congressional testimony of  Ms. Kerrigan, indicates they face a most troublesome economy, with uncertainties and burdens.

A bleak report from the Associated Press June 4 said that economic recovery will probably take longer than envisioned, as the Labor Department reported that unemployment for May had crept up to 9.1 percent. When Obama took office, the jobless rate was 7.8 percent. Only 54,000 jobs were created in May. Private companies hired only 83,000 workers, the fewest in a year.

Ms. Kerrigan said, “May’s job numbers are not surprising given flawed government policies that continue to jack up business costs and fuel uncertainty.”

According to the new survey of the 100,000 members in the Council, 74 percent of small business owners report that higher gasoline prices are adversely affecting their business, and 47 percent say the high gas prices are blocking their plans to hire new employees. Some 41 percent says they already have raised their prices because of gasoline costs.

Twenty-eight percent said they have had to cut employees or their hours worked; 38 percent say they fear if gas prices don’t drop or if they go up still more, their business won’t survive, Ms. Kerrigan told the House Committee on Oversight and Government Reform.

Even if gas prices slide down a bit, they will likely stay relatively high and continue to pinch consumers’ pocketbooks and all the industries that depend on gas.

We would need up to 300,000 new jobs each month to make a major reduction in the unemployment rate, economists say.

Ms. Kerrigan spoke of “deep concerns” small business firms have about the economy and rising costs of health care, slow recovery, administration policy uncertainty, and the “need for a period of stability and certainty to generate positive momentum that will lead to sustained economic growth.” Only 7 percent of the firms surveyed said they used the new small business health care tax credit, “It is too restrictive,” said Ms. Kerrigan.

When it comes to creating jobs, particularly for small firms, Obama just can’t seem to get it right. For his new secretary of commerce, on June 2 he appointed John Bryson, a long-time dedicated environmental extremist. Instead of naming a person who is even slightly connected to the jobs engine of the economy – small business – he chooses a man whose only business credentials are as a former California power company executive and director of a couple of large companies.

Instead of any experience in dealing with our feeble, job-deficient economy, Bryson last year served on the United Nations advisory group on Energy and Climate Change. It called for transforming energy sources over the coming decade. Its goals are to end poverty and hunger, provide universal education, gender equality, environmental sustainability and global partnership.

Bryson co-founded the Natural Resources Defense Council (NRDC). Its romanticized mission: “To safeguard the earth, its people, its plants and animals and the natural systems on which all life depends.” This “green evangelist” seems totally detached from the nation’s deep anguish over the dismal state of the economy.

Ms. Kerrigan said her organization is quite concerned about the selection of where jobs are to take place – the so-called “green” jobs – that could take an unknown time to ever develop and may never provide a “robust economy,” she told me.

Long-term joblessness has become a major problem. In May, 33 percent of people without jobs had been unemployed for 52 weeks, up from less than 10 percent in 2007. Skills deteriorate as people are without work.

A member of the council, Sherwood Neiss, a Miami Beach entrepreneur, testified before the House Committee on Oversight and Government Reform May 10 calling for regulatory modernization at the SEC to “boost our struggling economy.”

He testified, “We can open the doors to small business growth and prosperity.” He urged approval of “crowd fund investing,” whereby groups of people come together to invest small amounts in start-ups to help an entrepreneur succeed. It is not currently permitted by the SEC.

“Over the past five years,” he said, “more than 500,000 people with ideas for films, albums, and art projects and entrepreneurs in developing countries have used crowd funding sites [on the Internet] to raise money.

“According to the Department of Labor prior to the financial meltdown, 76 percent of small businesses received traditional funding [from banks and other institutions]…With the financial meltdown our economy stalled, over 8 million jobs were lost….Traditional financing has virtually disappeared.” The security laws, he noted, were written to address abuse of large corporations. Today, however, “these laws require a small start-up to raise $50,000 to jump through the same hoops as a large corporation seeking to raise millions of dollars,” he observed.

People still want to invest in entrepreneurs because “they believe in people with ideas….Our nation’s small businesses have suffered disproportionately during the downturn and continue to struggle….Crowd funding has the potential to deliver the jobs Americans have been longing for,” he told the lawmakers.

“You would think,” Ms. Kerrigan said with a tone of frustration, “that the administration would see a need to ramp up efforts to help increase domestic energy exploration and development by streamlining government regulations and minimizing uncertainties.”

“Job creation, in the end,” said SBEC chief economist Raymond Keating, “is overwhelmingly about small business.”