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Job creation madness PDF Print E-mail
Friday, 17 July 2009 20:11

The Obama Administration rightly states that the solution to our economic meltdown is job creation.  We need to get more people working to get the economy rolling again.  That should be self-evident, and is one of the few things that I agree on with the Administration.  But which jobs are to be created is where the Administration simply gets it wrong.



The Administration loves to talk about companies that are "too big to fail", and consistently puts its efforts into large companies.  Those with strong and deep union ties, those with decades of history, those with billions in assets.  The Administration gives money, breaks, and support to those.  AIG, Citibank, GM, Chrysler, and Bank of America, to name a few.



At the same time, the Administration is pushing tax, carbon, and health care legislation that will cripple small businesses.  Those who have the misfortune to make just enough money to be considered "the rich" but are not big or old enough to be 'too big to fail'.


Well, if the Administration wanted to create jobs, I would posit they need to stop funding bailouts of the big companies, and stop hampering small business with insane regulations and taxation.  Why?  Because small businesses overwhelmingly create the new jobs.  This graph should be enough to explain the situation:




What does this graph show?  Jobs are created by new, small companies.  Companies of under 5 employees, less than 1 year old, result in over 1 MILLION new jobs, annually (net - this is after adjusting for company closures and layoffs).  Comparatively, that light blue box on the right - older, well-established big companies - create less than 80,000 net jobs per year.


If this Administration was serious about job creation, it would put its efforts into supporting small and new businesses, and stop giving billions and billions of dollars of handouts to big companies.  No company is too big to fail; in fact, the data tells us that what the mantra should be is that the company is too small and too new to fail.

Last Updated on Thursday, 03 December 2009 17:47