Author Topic: Why Small Business Isn't Hiring And Won't Be Hiring any time soon. (Great read)  (Read 1850 times)

Soul Crusher

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Why Small Business Isn't Hiring And Won't Be Hiring
oftwominds ^ | 02/08/2011 | Charles Hugh Smith


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Pundits and politicos promote a magical myth: a coming small business hiring boom. That fantasy is completely disconnected from the harsh realities of private enterprise.

Regardless of their ideological persuasion, pundits and politicos reliably repeat the mantra that "small business is the engine of jobs growth." The mantra is followed by the pundit-politico's belief that a "small business jobs boom is right around the corner."

I have news for the pundits and politicos: ain't gonna happen. Why? The answer cannot be found in the manipulated and massaged Bureau of Labor Statistics numbers (have any real jobs been created, net of jobs lost, in the past year? Who knows?) or in the punditry's Cargo-Cult-like belief in a mythical "small business jobs machine" that they have never experienced and know nothing about.

While a handful of the new crop of politicos are entrepreneurs, most Washington denizens are attorneys, the offspring of wealthy or politically connected families or people who have lived off the government at some level their entire lives. Most have never had a customer or client or had to borrow off a credit card to make payroll. (I have; any pundits who can honestly raise their hands for that one?)

Pundits come in two flavors: the academics, happily making mud pies in the moat surrounding their secure Ivory Tower, and the loud-mouths who have screeched louder and longer than the other media-monkeys. All know less than zero about actual small business.

To understand why small business isn't hiring and won't be hiring, you need to understand the psychology of this era and the systemic pressures on all small businesses which don't live off Federal government contracts. In a very powerful sense, those businesses which live from one government contract to the next are not private businesses at all: they are merely proxies or extensions of the government. Their non-governmental work is either trivial or non-existent.

So when some government set-aside program sanctions $40 million or whatever for "small business," it's no different than opening another government office: the only difference is the employees are not Civil Service. The competition is not between private-sector and government, it's only between rival government contractors.

What pundits and politicos don't get is small business knows the "recovery" is totally bogus. Why hire somebody who you'll have to lay off a few months from now? Laying people off is emotionally painful--you dread it, tire of it, are wearied by it. This is a real human being who is losing their job, not some ginned-up statistic hyped by some think-tank-pundit pulling down $15K a month for dishing whatever flavor of propaganda he/she is paid to churn out.

The Washington establishment--the Fed, the Treasury, Congress, the Obama Administration-- seem to believe they've successfully pulled the propaganda wool over Americans' eyes, and that the yokels actually believe "things are getting better and better every day and in every way."

Only the yokels without clients, customers and payrolls can believe the propaganda.

Meanwhile, back in the real world, small business income is down 5%. Small Business: Still Waiting for Recovery.

According to data from the Bureau of Economic Analysis. Proprietors' income-- the profits of unincorporated businesses such as partnerships or individuals who work for themselves--is down nearly 5 percent from two years ago, while corporate profits have jumped 21 percent in that period.

About 19.9 million partnerships and sole proprietorships with no employees existed in 2008, the latest year for which U.S. Census Bureau data are available. That number fell almost 2 percent from the previous year.

In a private-sector workforce of about 106 million, that's about 19% of all people with a job. Recall that the BLS counts you as employed if you work one hour a week or if you're "self-employed," even if you aren't making a dime.

Only in the Fantasyland of propaganda does nobody notice that self-employed people who are seeing revenues and profits fall do not need to hire someone: they're sinking all on their own.

Only in the Fantasyland of propaganda does nobody seem to notice that for every celebrity-chef restaurant opening to gushing hype in Manahattan, West L.A. or San Francisco, two other restaurants quietly closed.

Small business understands uncertainty is now permanent. That's why 26% of all new private-sector hires are temporary--and if we subtract the bogus phantom jobs created by the BLS "birth-death model," then the number is probably more like a third or even half.

Small business understands that the "recovery" is merely a Federal towel stuffed in the gaping hole in the rowboat's leaky planks, and that it's literally insane to hire workers when your revenues could evaporate next month.

Small business re-discovered it could do more with less. Once businesses trimmed payrolls to survive, they discovered they could make more money for themselves and do so with fewer people. Why add to staff when all that means is transferring your own paycheck to someone else?

Small businesses are closing, not opening. Rents have barely dipped, local government taxes and junk fees have skyrocketed, and the complexities and costs of the new healthcare bill have all added systemic pressures on every small business: it's either adapt quickly and successfully or perish, and many are choosing to close down and quit working so hard for so little payoff.

When leases expire, the doors close, and no one leaps in to pay boomtime-level rents, and heavy business licence and permit fees. The only people insane enough to hire anyone are three guys working in a living room somewhere, trying to hire a few Javascript programmers to finish their app so they can cash out by selling the "company" to some larger enterprise.

The programmers are independent contractors who have to take care of their own healthcare and taxes, or they're young and single so the healthcare insurance costs are modest--if they even bother with buying insurance.

Nobody's hiring for the long-term for the simple reason that there is no long-term: we're either selling the company as soon as we can, or we're waiting for the next dip in revenues to close down before we lose everything.

Local government has grown accustomed to small business being uncomplaining tax-donkeys, silently paying every junk fee and every additional tax the government levies. Only a funny thing happened on the way to local government's plan to fill the shortfalls in its own revenues by taxing small businesses even more: they're closing down.

The reason is simple: why work for free? This is incomprehensible to both local governments, who expect all those "filthy-rich small-business Capitalists" to pay higher taxes and fees, and the safely remote-from-the-real-world pundits and politicos.

These members of the academia-think-tank-media-politico Cargo Cult have a magical belief in a mythical "small business" which is anxious to get out there and create new jobs because "to get rich is glorious," as if "getting rich" is even an option for 90% of real small businesses.

In the real world, small businesses aren't getting rich, they're going broke and closing down to save whatever remains of their sanity and assets. You want high-tech and "clean energy" jobs? Well, how about MySpace laying off half its 1,000-person staff? How about Evergreen Solar closing its Devens, MA plant, laying off 800 workers and moving production to China? Did the pundits honestly think that globalization was over?

Memo to pundits and politicos: you worship at the altar of Capitalist profits driving small business--get real. People will do whatever they have to in order not to go broke.

That's why the three guys or gals aren't renting an office--who needs the overhead? They also don't have health insurance: who can afford $1,000 a month for crappy, confusing "care" young people rarely even need? Better to pay cash.

And they aren't hiring "employees": they're paying their friends with equity shares, or cash, and paying their own taxes is up to each free-lancer.

That is the new model of American entrepreneurship: no office, no overhead, no employees, no health insurance, no business travel. That's the only way any new enterprise can survive.

Everyone who buys into the myth and pays absurdly high rents, junk fees and healthcare insurance will be ground down and bled dry. The only exception are those well-connected enough to run a pipe into the limitless lake of Federal money. Yes, 40% of the lake is borrowed from our kids, but no matter--the "recovery" is real, and this stone with a crudely painted radio dial is in fact a working radio. It's magic. You just have to believe.

Small business can't afford to believe in myths and fantasies. They are dealing with the harsh reality of adapt or die.



________________________ ________________________ ________



SPOT ON.  


HOPE & CHANGE BITCES!

Soul Crusher

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Small businesses are closing, not opening. Rents have barely dipped, local government taxes and junk fees have skyrocketed, and the complexities and costs of the new healthcare bill have all added systemic pressures on every small business: it's either adapt quickly and successfully or perish, and many are choosing to close down and quit working so hard for so little payoff.

When leases expire, the doors close, and no one leaps in to pay boomtime-level rents, and heavy business licence and permit fees. The only people insane enough to hire anyone are three guys working in a living room somewhere, trying to hire a few Javascript programmers to finish their app so they can cash out by selling the "company" to some larger enterprise.



________________________ ________________________ _________--


Toobad the economic illiterates like obama, pelosi, reid, barney frank, dodd, kerry, waxman, boxer, feinstein, and all the other pieces of shit who stand for more govt. don't grasp this basic concept.   

whork25

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In Germany they have a booming economy.

Much of the success has come from making it easier for companies to fire people and hire them part-time

It wasnt popular to get through but it seemed to work in the long run.




Soul Crusher

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Soul Crusher

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Great damn video.   Watch it.  It talks about what is going on in the economy why we re FFFUUUCCCKKKED. 

whork25

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Great damn video.   Watch it.  It talks about what is going on in the economy why we re FFFUUUCCCKKKED. 

Im gonna watch it

Soul Crusher

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Option D

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Obama did it

OzmO

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Yeah maybe,  but I donno,  some of this crap is just crap I think.

Right now, there are 21 hotels in e Disney world/ epcot center. And they are all nearly booked.  Go to Vegas, i was there last summer and it was a zoo of people gambling and spending every where.  My daughter had no problem finding 2 great jobs with benefits, both small businesses (less than 100 employees) with in the last year.

I think extending UE benefits is part of the problem here.

Soul Crusher

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What pundits and politicos don't get is small business knows the "recovery" is totally bogus. Why hire somebody who you'll have to lay off a few months from now? Laying people off is emotionally painful--you dread it, tire of it, are wearied by it. This is a real human being who is losing their job, not some ginned-up statistic hyped by some think-tank-pundit pulling down $15K a month for dishing whatever flavor of propaganda he/she is paid to churn out.

The Washington establishment--the Fed, the Treasury, Congress, the Obama Administration-- seem to believe they've successfully pulled the propaganda wool over Americans' eyes, and that the yokels actually believe "things are getting better and better every day and in every way."

Only the yokels without clients, customers and payrolls can believe the propaganda.

Meanwhile, back in the real world, small business income is down 5%. Small Business: Still Waiting for Recovery.



________________________ ________________________ _______________


I deal with dozens of small businesses daily.   things are getting worse not better overall.   Recod foreclosures, record food stamps, record debt, states near bankruptcy, massive vacancies, etc.   

Additionally, we have the least amount of participation in the workforce since 1940!     

Soul Crusher

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Obama did it

He's made and currently making a bad situation far worse with his WTF policies.  If someone spent 100% of their time trying to wreck the economy worse, they could not have done as ruthless and proficient a job at it than Obama has.   Whether its ObamaCare, regulating carbon, Card Check, regulatory uncertainty, he has only added to the bad situation.         

OzmO

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Maybe so 3333,

I just know what I am seeing and it doesn't always match the gloom of what I read.

And you have got to be sick that only 51% of peeps polled believe Obama won't be elected.  That poll makes it look like he will.

Soul Crusher

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Obama's base is made up mostly, no all, of those who would votefor him even if the entire nation were literally on fire.   

The blacks supports him 95%, hispanics 65%, guilt ridden libera whites - 30%, govt employees - 75%, deadbeats - 100%, non-taxpayers - probably 90%, and that adds up to close to 50% of the nation right now.   

Its a sad state of affairs - the slackers, leeches, parasites, moochers, takers, and non-productive elements of society are now close to a majority and they will always vote the guy promising more free shit from everyone else, regardless of the impact on the people actually pulling the load. 

Sad but true.     

Soul Crusher

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A nation infested with leeches, parasites, and barely-humans like this can't survive.  










LurkerNoMore

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Soul Crusher

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Eat shit lurkinmenstoilets, CBO Director just confirmed ObamaCare will cost 800000 jobs. 

Yes its intentional.

LurkerNoMore

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*yawn*


Why... crazy talk like that is just "hysterical".

I am disappointed you didn't post one of your little photoshop pictures or make up some silly little acronym in your reply.    PPPOOOFFFSSS poster.

Soul Crusher

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Yeah ok lurkertwat.  800000 jobs lost due to the asshole you support.  Nice. 

LurkerNoMore

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How many of those 800000 are doctors that walked off their jobs like you claimed that would happen?
How many of those 800000 are zombies rioting in the streets like you said would happen?

I take it that in your rush to back those little black duffel bags that you were convinced you would need one day, you failed to pack any common sense, credibility, or your prozac.

Good job.

Soul Crusher

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Record level on ue
Record level foodstamps

Lowest level labor force in decades

Health premiums skyrocketing.

Inflation taking hold. 


Yeah hope and change you twat. 

LurkerNoMore

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All Obamas fault.  And intentionally too right?

Just like you are intentionally trying to ruin the Getbig Politics board?  Is that how it works.  I mean, all these half truths, exaggerations, out right lies and other bullshit.  The constant 24/7 whining and crying?  The no life outside the internet because you have to post on Getbig every single hour... all day long... with more of the same old same old.

Just a straight up honest question here :

When does being a crybaby become just too much by YOUR standards?

Soul Crusher

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What statement did I make that was not true you trolling twat?   

What's wrong? Your little hope and change express off the tracks got you down? 

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What statement did I make that was not true you trolling twat?   

What's wrong? Your little hope and change express off the tracks got you down? 
You said Obama Called Swat on Grandmothers
then you said his security detail did..based on nothing

You said Obama Spent 2bil in India or some shit

You said You got a letter saying due to obama care your insurance rates were being raised

You said that i dont tolerate any and all criticism of Obama.. after i have posted my qualms with the Administration many many times.


But this is the killer.. and what shows the true colors of 3333piece of shit..cbo says its Defecit Neutral, its complete bullshit.. CBO says its gonna cost.. its spot on...
Obama takes too many Vacations and is lazy...um i mean Obama is hell bent on destroying the country and will stop at nothing.. dude offf yourself

OzmO

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33333. Has been called on this stuff before regarding misleading posts.  This is nothing new.  He hates anything that's not fully right wing to the point of posting  petty digs and half truths.

That aside, much of what he does post is true and is concerning.