Wednesday, July 21, 2010

Who creates jobs?

An interesting article in Forbes today by Rich Karlgaard. In the article he examines why Obamanomics has been a spectacular failure when it comes to job creation (and everything else, by the way). Karlgaard first quotes some recent articles in the mainstream media in which their left-wing authors such as Paul Krugman and John Harwood wring their hands in confusion over Obama's dismal unemployment record. How can this be, they lament? Karlgaard notes a common element in all these pieces: the authors go out of their way to avoid asking actual business owners (i.e. those who create jobs) why they're not adding to payroll.

Karlgaard concludes that the only logical reason for this journalistic negligence is that the aforementioned pundits are afraid they won't like what they hear from business owners; that it won't fit their pre-conceived liberal narrative:

I understand the left's reluctance to talk to employers directly. Talking to employers about jobs, and lack thereof, would wreck the left's narrative. What do you hear when you listen to employers? You hear stories like this one, from the comments section of a recent Mort Zuckerman piece:

I am a building designer, used to have employees and wanted to grow my firm to about 8 people. No longer. I will be more likely semi-retired by choice from this point on because:

Cost of Employees way up: Workman's Comp, Unemployment insurance, Health Care is up by nearly $ 8 per hour over 3 years. Health care alone now costs $4 an hour if they are young, over $5 per hour if over 50.

Business Regulation - every purchase over $ 600 needs a 1099 form, meaning I have to get the address and the tax ID of the power company, the insurance company, Office Depot, etc. I will be going from 4 1099's to over 100.

Health Care - I will now have to track where my employees go in the event of HazMat exposure. Did the government office they measured in for a few days contain lead or asbestos. Duh - yes, but it is supposedly safe for government employees why not mine.

Security - I must have lots more records on my employees keyed to their SS#, but if somehow I lose my laptop I am a crook.

I could go on and on, but my reward is:

My marginal tax rate jumps in 2011, about 30% more than before.

the FICA income limit keeps rising, that is 15% of net for the self employed on the marginal increase.

It is obvious that there will be a lot more taxes coming. So my risk is way up, but the government now TAKES over half of any marginal increase. I would rather fish.

Multiply "I would rather fish" by a few hundred thousand small business owners and you get a jobs crisis. You get 9.5%, 16.5% or even 22% unemployment when the models say it should be 8% at this point in the rocky recovery.

The forgotten man in this crisis is the employer. We forget him at our danger.

This has been an all-too-familiar theme with the Obama. As we've noted before, the Obama Administration's complete lack of private sector experience and outright hostility to business make it much less likely that an existing business will expand or that a potential entrepreneur will decide to take on the responsibilities (and risks) of business ownership. New business owners already have enough obstacles in front of them. To those obstacles they can now add one more: the specter of being placed squarely in Obama's crosshairs. Why bother? Many aren't going to, as the business owner quoted above indicated when he said he'd rather fish. Can anyone honestly blame him? H/T


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