While Michigan is on right track, federal policies are counterproductive
The state’s leading advocate for small business owners presented the “State of Michigan Small Business” before the state House Commerce Committee. The presentation explored the common definitions and perceptions of small business along with some important metrics that confirm the important contribution that small business makes to the state’s economic health.
In his testimony before the Committee, Charlie Owens, State Director for the National Federation of Independent Business (NFIB), pointed to data from the Small Business Administration (SBA) that while Michigan had a net loss of 405,630 jobs from 2007 to 2010, small businesses with 1 to 4 employees actually created 67,645 new jobs. “During that dismal period in Michigan’s economy, small business was the only sector creating any jobs at all,” said Owens.
The ultimate conclusion of the testimony by Owens was that while Michigan has been making all the right moves to improve its business climate, at the federal level the direction is almost the opposite.
“There can be no greater contrast between Michigan’s direction and that of national economic policy,” said Owens. “While Michigan has made immense strides in turning the state away from the failed central planning and government command and control template of the past, our federal government seems to have doubled down on this approach.
Owens went on to say that small business was the economic “canary in the coal mine” warning of danger to the national economy when its own health is threatened.
“There are some disturbing indications that federal policies have thrown a wet blanket on small business growth and job creation, said Owens. “The foolish proposal to hike the federal minimum wage announced in the President’s State of the Union speech is just another indication of how out of touch Washington is with the struggles of main street small business.”
Owens went on to site some troubling national developments for small business:
• A new survey by Citibank finds that 23 percent of small business owners have gone without pay for at least a year as they work to keep their businesses afloat in a tough economy.
• For the first time since records have been kept, payrolls at firms with fewer than 500 employees accounted for less than 50 percent of the total workforce during the recession and have barely recovered
• Small firms are the missing link in economic expansion. The total number of small businesses has decreased to 4.9 million in 2010 from a peak of 5.3 million three years earlier.
• “The environment for small businesses is not good,” said William Dunkelberg, NFIB’s chief economist and a professor at Temple University in Philadelphia. “Sales are weak, there’s regulatory bombardment, tax changes, and all the uncertainty about the economy.
• A survey of 1,482 small businesses by the U.S. Chamber of Commerce confirmed the bleak outlook. More than half of respondents in the fourth quarter projected the economic climate for their firms will worsen over the next two years.
The presentation concluded with Owens urging the Committee, and the legislature, to continue on the course laid out by Michigan’s Governor Snyder in improving the state business climate and to implore elected officials at the national level to make a course correction before the country heads deeper into recession.