What tops the holiday wish list for American small-business owners? Economic certainty. Certainty is everything for a small business, and Washington is a large part of providing that certainty - or uncertainty. When business owners don’t know what’s on the horizon, they are forced to curtail hiring and halt reinvesting in their business in order to start saving for a possible new legislative policy or regulation from the federal government.
According to a recent U.S. Chamber of Commerce report, just 17 percent of small businesses expect to add employees over the next year, and another 12 percent said they plan to cut jobs. More than half cited economic uncertainty as the main reason for holding back on hiring.
This brings us to the still unacceptably high unemployment rate, which has exceeded 8 percent for the past 34 months. While the drop in November’s unemployment rate from 9 percent to 8.6 percent may sound good, the numbers behind the drop are extremely troubling, with 315,000 Americans leaving the labor force and just 120,000 new jobs created. This means the unemployment rate dropped because the size of the labor force dropped - in other words, many Americans simply stopped looking for work.
According to Heidi Shierholz, economist at the liberal Economic Policy Institute, if this anemic growth rate continues, it will be more than two decades before we get back down to the pre-recession unemployment rate. She continued by saying, “[A] shrinking labor force is not the way we want to see unemployment drop.”
This sobering fact underscores why Washington must do more to remove barriers for private-sector growth and provide more certainty for small-business owners.
“It’s the uncertainty and not being able to plan. It’s not knowing what’s going to happen when you’re doing one thing one year and one thing the next year,” said Gary Marowske, president of Flame Furnace in Warren, Mich., during a recent House Small Business Committee hearing.
William Smith, president and CEO of Termax Corp. in Lake Zurich, Ill., echoed the same sentiment: “The problem we have is uncertainty. We would like … years and years of consistency. We can compete with anyone in the world if we know where things are going to be, but because of the state of flux that our tax code has been in for years, it creates very big disincentives for companies like ours.”
Small businesses are our best job creators - responsible for creating more than 64 percent of new jobs over the past 15 years - and the answer for getting Americans back on the job.
A start in providing certainty would be for Senate Majority Leader Harry Reid to immediately bring up the 25 bipartisan jobs bills passed by the House. House Republicans have put forth an aggressive pro-growth agenda this year, including our committee’s Regulatory Flexibility Improvements Act of 2011, which the House passed last week, but unfortunately, all of these bills lie idle in the Senate.
Passing a budget would be another step in the right direction. It has been more than 950 days since the Democrat-controlled Senate last passed a budget. Our record debt continues to be a dark cloud over our economy, and it is a barrier for job creation that can only be removed by restoring fiscal discipline in the federal budget.
Other ways we can provide certainty for small-business owners include: reducing regulatory burdens; simplifying the tax code and keeping taxes low; using our domestic resources to lower energy prices and, last but certainly not least, living within our means here in Washington.
Many of the small businesses around the nation want to build on their seasonal hires, but they are uncertain about what new taxes and regulations await them in the new year. As we approach the holiday season, there would be no better gift than to make the wish of economic certainty a reality for our nation and small businesses by taking steps to provide the confidence they need to grow, create jobs and put our country back on the path to prosperity.
Rep. Sam Graves, Missouri Republican, is Chairman of the House Small Business Committee.
Read the Op-ed Online HERE