Jobs Creation - We Just Don't Get It

There are roughly 25 million businesses in the US. This breaks down to 27,000 with over 500 employees - using the US Dept. of Labor's criteria combining large and medium-sized businesses. The remainder or 24,973,000 are considered small businesses with less than 500 workers. The 27,000 large and medium sized businesses aren't creating new jobs and have not, in the aggregate, for the past couple of decades. In fact, layoffs are still occurring in these segments.

The "sweet spot" where jobs have been created and traditionally pulled us out of recessions is small business. Let's take a closer look at the small business segment breakdown. The majority of small businesses, or roughly 19 million, are sole proprietorships and self-employed individuals. That leaves roughly 6 million small businesses with multiple employees. This is the segment we need to "turn on" hiring to start the new jobs engine again.

During this past recession, small businesses did an unprecedented amount of belt-tightening just to keep their doors open. This worked. During the last quarter of the past year, worker productivity increased a phenomenal 6 percent. Companies big and small learned to do more with less. With all of the talk of double dip recession or a long, slow recovery that may take a decade, understandably these companies don't want to overextend the liabilities side of their balance sheets by adding workers.

What our President and his administration do not understand, with their tax the rich policies (which I fully agree with - let them milk Warren Buffet, George Soros, Bill Clinton, et al, for a greater percentage of their income), is that the typical small businessperson is not rich. Yes, $200,000 or $300,000 is a lot of money to most of the population - but this is where job creation comes from. When a small business owner starts to feel comfortable with his or her business and earnings, and sees the opportunity expansion will bring, they hire new employees. Higher taxes and forced healthcare expenses on these businesses will do one thing - keep them from adding employees. They are already getting hit with the credit squeeze, with many being denied business loans.

We need to closely examine this "sweet spot" of job creation and carve out tax increase legislation for these small business owners, who are not rich. It will only continue to exacerbate the unemployment situation if we cannot treat a small business owner differently than the "true" rich crowd. An extra $500,000 in the hands of a small business entrepreneur is likely to increase his or her workforce.

We need to do all in our power to close the loopholes for the rich, which will certainly help our economy. As recently reported in national media, a wealthy Senator recently berthed his $7 million yacht in another state to get out of paying $500,000 of taxes to his home state - this is abuse of the system. The $500,000 in the hands of a small businessperson will produce more jobs than this wealthy Senator will.

Richard S. Pearson is the Author of 5 Necessary Skills to Keep Your Career on Track. He has held vice-president positions with four multibillion dollar travel industry companies and three Internet early stage companies. He has a BA degree from Regis University in Organizational Development. His experience has given him a unique perspective on how to navigate the organizational structures of both large and small companies. He has hired and trained hundreds of employees from frontline salespeople to vice presidents, and coached many through their careers. He is currently working on facilitating the large increase of travel between the US and China, which is taking place. http://www.5necessaryskills.com