Uncertainty Stifling Job Creation
The Occupy Wall Street protestors are focused on the wealthiest one percent of Americans and President Barack Obama is engaging class warfare in an effort to raise taxes on the rich. These tactics might provide an outlet for the frustration of protestors, or a possible source of paying for the president’s big government programs. However, neither approach will do anything to stimulate the main engine of job creation in America – small and mid-sized businesses.
Decision makers in those businesses are not creating new jobs, at least not at the pace necessary to fuel a robust rebound from the economic recession. The primary reason why these businesses are not growing can be summed up in one word: uncertainty. In order for the owner or manager of a business to risk creation of a new job he or she must have confidence that the new payroll commitment can be met. Absent that confidence, most business leaders will sit tight, wait for the cloud of uncertainty to be resolved, and then move forward.
Right now uncertainty abounds. At the federal level, confusion reigns over the ultimate financial impact of the nation’s new health care regulations. Health care costs have been rising steadily and remain outside the control of most business managers. The only predictable action is to not hire, thus avoid incurring the expense entirely. Add to that the temporary nature of the Bush era tax rates, the potential of tax hikes to help lower the national debt, and the regulatory fervor of the Obama Administration; the nation’s job creators face uncertainty at every turn.
Twice each year the Lincoln Institute conducts the Keystone Business Climate Survey. The poll surveys the actual owner, top manager, or chief financial officer of businesses throughout the state. These are the people working where the rubber meets the road of the nation’s economy. The most recent poll asked the question: In your opinion what is main reason job creation continues to remain stagnant? It was an open-ended question with no suggested answers, just a blank for participants to write in their own answer. Uncertainty, a lack of confidence in the federal government, and over-regulation came back as the clear reasons.
Those concerns explain why employment levels dropped at 27% of the companies surveyed, while it rose at 25% of the businesses – essentially leaving hiring in the commonwealth stagnant. With unemployment in the 9% range, stagnant is not a good place to be. Further, 36% of the respondents said business conditions in Pennsylvania had gotten worse over the past six months while just 12% thought the economy had improved; a marked decrease in confidence since last spring’s survey. And, looking ahead 29% expect business conditions to continue deteriorating over the coming six months with just 22% expecting the economy to improve.
Against this backdrop of government-created uncertainty and lack of confidence the president has proposed spending another $447 billion on a so-called jobs bill. His proposals would add to the number of government jobs, those paid for by taxpayer dollars. But, the Keystone Business Climate Survey found it would do little to spur the creation of private sector jobs. Seventy-three percent of those polled by the Lincoln Institute said they do not expect the Obama plan to actually lower the nation’s unemployment rate. Seventy-six percent said the proposed $4,000 per job tax credit would not cause them to add to their payrolls; 71% said cutting the employer’s share of FICA taxes in half would not result in their creating new jobs.
That is because the Obama jobs bill not only fails to address the core underlying causes of the nation’s unemployment ills, but it actually adds to those concerns by increasing federal spending making future tax hikes – some to be paid by businesses – more likely. In other words, the policies of the Obama Administration have dug our economy into a very deep hole and the president is now proposing to dig deeper faster.
Employers in Penn’s Woods are like entrepreneurs all across America. They want to grow their businesses. They want to expand, to add new jobs, to do their part to fuel a robust recovery from the economic recession. The reason they are not is government-induced uncertainty. Add in all the class warfare rhetoric and upheaval in the streets, and that uncertainty grows by the day. What also grows is the certainty that the economy will not rebound until the federal government changes course.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected])
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