When you run a small business in the defense industry as I do (President and Founder, Valor Network, Inc.) incremental steps are the best way to move forward in an uncertain economic climate. Adding just one more employee is not just about filling a gap or trying to exploit an opportunity, it’s about the bi-weekly payroll run that must be balanced against current cash flow and the hope of future revenue streams. Small businesses are ever more worried about taking that step when market gyrations have immediate negative effects and the specter of more government regulations can result in increased costs.
Yet, every day federal and state governments pay out millions of dollars regardless of their top line revenue. Employees are added and services are provided without careful (or any) evaluation of the costs and benefits of using a private company to fill that need. The rancor and partisanship in Washington can be replayed in government offices throughout this country where decisions are made carte blanche to cut contractors and leave government jobs intact.
In a capitalistic society, goods and services of the vast marketplace are best provided by private businesses whose primary M.O. is increasing profits. The government has no profit incentive and thus, no real performance or productivity measurements. In order to stimulate job growth the government needs to transition to a smaller, more focused element of society. In reality, taxes are social payments made which are then disbursed at the discretion of elected officials. The first step the government needs to take is to stop paying long term unemployment insurance. Sounds like a draconian measure since millions would be without weekly paychecks? Surely, our society would collapse.
Yet, think about it from a business perspective. Someone loses their job and is eligible for unemployment insurance. They receive unemployment checks for six months and are still unable to find a job. Instead of continuing the payments, the government establishes a policy to provide the unemployed a letter making them eligible for the “One Job at a Time” Act. If a business employs that person, instead of the unemployed pocketing more money, the employer gets that payout for, say, a year or two. In addition, that business is eligible for a tax holiday of up to two years on payroll taxes for hiring the ‘serial’ unemployed.
The government has now ceased making unemployment insurance payments which act as a disincentive in finding a job and has incentivized business to hire. If every small business is given the opportunity to do this for one or two people, the tide of unemployment growth will end and businesses will not only benefit significantly from the government payouts, but the benefits to the newly employed are numerous. They have the security of a salary and even possibly additional health/savings benefits. As well, when someone has a job, they feel worthwhile, they have disposable income to spend and those around them have confidence of a better tomorrow. Small businesses gain a real opportunity to expand and a hedge against the current vagaries of this volatile economy. It seems like one or two people will not make a real difference, but there are millions of small businesses and the addition of this staff to their workforce is significant. Once again the engines of economic growth can be restarted.
It’s not that we don’t need government. We do. We just need government to be innovative like business and find ways to reduce the size of government while stimulating the economy. The wrong way is increasing the number of government employees, services and offices. The right way is to find solutions that target the key decision making factors of small business owners and put them in the driver’s seat.