Small Firms Create Majority of New Jobs in May; Robust Policies Can Help Keep it Up

John Arensmeyer

John Arensmeyer

Original statement issued on June 1, 2012:

Our nation’s smallest businesses—those with 1-49 employees—continue to outpace large businesses in the race to put America back to work. Businesses with fewer than 50 employees created more than half of all new jobs last month, and, from April to May, they boosted the actual number of jobs they generated by 16 percent, according to data released Thursday by Automatic Data Processing, Inc (ADP). Small businesses overall accounted for more than 93 percent of all new jobs last month, while large businesses created just 6.8 percent of new jobs.

These figures underscore the starring role small businesses have in helping lower the unemployment rate, and they’re a reminder that the smallest firms are our country’s primary job creators. These businesses can and will put our economy back on track, but they can’t do it singlehandedly. Legislators must continue pursuing pragmatic economic policies that ensure entrepreneurs have they tools they need to keep rebuilding the economy. We suggest:

  • Calling on the Federal Deposit Insurance Corporation (FDIC) to issue bank charters that would supply small firms with more credit. The agency has not issued a single charter this year, despite the dismal lending landscape entrepreneurs continue to face: our national opinion polling found 90 percent of small business owners view credit availability as a problem.
  • Passing the Small Business Jobs and Tax Relief Act, which would promote small business job creation by providing a 10 percent income tax credit for increased payroll in 2012 while also extending the 100 percent expense deduction for equipment that lowers owners’ after-tax costs.
  • Extending the Production Tax Credit for wind project development, as it supports 37,000 jobs that would be at risk if the credit expires. Not only would extending this credit protect existing jobs, small business owners also indicate it could help generate new jobs: 7 in 10 small business owners believe government investments in clean energy play an important role in boosting the economy and creating jobs now.
  • With ADP’s latest data highlighting small businesses as invaluable assets to the economy, it’s clear we must support them with pragmatic solutions that address their greatest concerns. We encourage lawmakers to pursue robust policies such as those listed above, as failing to do so would only hamper our fiscal recovery.

Small Business Week Wrap-up: A Reminder to Keep Our Entrepreneurs Top of Mind All Year Long

John Arensmeyer

John Arensmeyer

Originally featured in The Huffington Post:

As 2012 progresses, the political heat in Washington is climbing faster than summertime temperatures, and small business is becoming increasingly central to policy debates in Congress. Entrepreneurs make up a core constituency in the United States. With National Small Business Week having recently ended, now is a better time than ever for legislators to reflect on these individuals’ needs and work to address them — one of which is tax relief. Luckily, Congress will have a chance to do just that when the Small Business Jobs and Tax Relief Act of 2012 comes up for a vote in June.

Before we get into the policy nitty-gritty, let’s talk about small business’s impact on our economy. In early May, Automatic Data Processing, Inc. (ADP) released data revealing our nation’s smallest businesses — those with 1-49 employees — continue to outperform large businesses in the job creation arena. They generated roughly half of all new jobs in April, while large businesses created just over 3 percent.

Figures like these reinforce the fact that small businesses are indeed the backbone of our economy. If we want to sustain that, or better yet improve it, it’s time for lawmakers to put partisanship aside and work together on policies that meet entrepreneurs’ needs. And in fact, legislation recently introduced in the Senate would be particularly conducive to small business job creation. Authored by Senate Majority Leader Harry Reid, the Jobs and Tax Relief Act would help small firms save money in two ways.

For one, it would give them a 10 percent income tax credit on increased payroll in 2012. This is meant to encourage small business owners to hire or boost employee wages right now, and to reward them for doing so. The nonpartisan Congressional Budget Office has said that compared to other proposals for incentivizing small business job creation, proposals like this one would have the greatest value per dollar of output.

Another way the bill would boost small firms’ bottom lines is by extending the 100 percent deduction for equipment purchases. That would lower entrepreneurs’ after-tax costs, prompting them to make new investments that can accelerate our overall economic recovery. This deduction is widely known to enjoy bipartisan support, which makes sense, considering it reduces the average cost of capital across all investments by more than 75 percent for small business owners, according to estimates from the Treasury’s Office of Tax Policy.

As we move beyond the recession, it becomes increasingly apparent that our smallest companies are the ones putting America back to work. That’s why we’ve been celebrating them this week. From our online seminars that inform entrepreneurs about how to navigate loan resources, healthcare reform and energy upgrades to our national small business photo contest, it’s been a busy week for us.

We’re doing everything we can—every week—to help make sure entrepreneurs have what they need to grow the economy. We hope legislators will make it a priority to do the same. By passing the Small Business Jobs and Tax Relief Act, lawmakers can give entrepreneurs some well-deserved relief. It would not only better financial conditions for them, but for the economy overall–and that means for each and every one of us.

Small Businesses Create 15 Jobs in April to Every One Created by Big Business

John Arensmeyer

John Arensmeyer

Original statement issued on May 4, 2012:

ADP released data Wednesday revealing our nation’s smallest businesses—those with 1-49 employees—continue to outperform large businesses in the job creation arena. Businesses with fewer than 50 employees created roughly half of all new jobs in April, while small businesses overall accounted for a sweeping 96.7 percent of all new jobs last month. Conversely, large businesses created a mere 3.3 percent of new jobs.

These figures reinforce the notion that small businesses—and particularly those with fewer than 50 employees—are indeed the country’s primary job creators and remain the backbone of the American economy. Of the 119,000 new jobs created last month, the smallest businesses created 58,000, while those with 50-499 employees were responsible for another 57,000, according to ADP (Automatic Data Processing, Inc.). Only 4,000 jobs were generated by businesses with more than 500 employees in April.

We encourage lawmakers to continue focusing on policies conducive to small business job creation, such as investments in renewable energy, which 71 percent of small business owners believe would help create jobs immediately according to research we released last week. Boosting small firms’ access to credit is another surefire way to keep the momentum going. Small businesses can and will put our economy back on track, but they can’t do it singlehandedly. Legislators must continue pursuing pragmatic economic policies that can ensure entrepreneurs have they tools they need to keep rebuilding the economy.