New poll claims small businesses wanted more cuts in fiscal cliff deal

January 16, 2013 at 10:53 am 4 comments

A new poll of small businesses by the Job Creators Alliance (JCA), an organization made up of CEOs of big businesses, claims that what small businesses really wanted out of the fiscal cliff deal are more spending cuts. The survey also claims that small businesses view taxes and regulations as the biggest threat to small business growth and our economy.

This is pretty much the opposite of what we have blogged about before (here, here, here, and here). It is in fact surprising to hear that small businesses would be calling for larger spending cuts. As our previous blog discussed, the automatic spending cuts that would have gone into effect at the beginning of this year would have had significant detrimental impacts on small businesses. Not only would there be impacts on businesses that have contracts with federal agencies, but the cuts would have greater indirect impacts as well. The San Jose Mercury News had summed it up well:

But it goes beyond the job losses likely to be suffered by companies with government contracts. It also includes businesses that benefit indirectly. For example, a company that provides cleaning or catering services to a government contractor might be one of the casualties when a contractor has to cut costs. Or a retailer that depends on a contractor’s staffers for its business may have to lay off workers when sales fall. ”A lot of these companies don’t know they’re dependent on federal contracts,” says Stephen Fuller, a professor of public policy at George Mason in Fairfax, Virginia.

The JCA survey also found that small businesses felt that the federal government is creating a “hostile” environment for small businesses. But who exactly are these small businesses? Bob Luddy, president of CaptiveAire Systems Inc. and a member of the Job Creators Alliance, stated at a press conference that even though only a few small businesses make more than $450,000, they “are the primary job creators” and they are “very upset.”

Understanding who the JCA is representing in this survey puts the statements about regulation and spending cuts into context. It appears that they are not representing the very small  businesses that make up the downtowns and Main Streets in communities across the nation– not the bakeries, auto repair shops, salons, day care centers, etc that we work with every day. A very tiny sliver of small businesses make more than $450,000, which is the threshold for increased taxes according to the fiscal cliff deal. Only 1.4 percent of small businesses make more than $250,000– those making more than this are even a smaller fraction.

Surveys of these very small businesses find that their top concern is weak consumer demand, and that regulation was not among the top concerns.  What small businesses need is a level playing field, certainty about regulations and fiscal policy, and policies and programs that support a growing middle class– people who can afford to buy their products and services.  The findings of the JCA survey represent the concerns of a very specific kind of small business– one that may employ a small number of workers, but is in no way “small” when it comes to profits. The JCA says that what we need is for government to get out of the way of the free market. What we actually need are fair and efficient policies that provide access to economic opportunity for all businesses, big and small, and that help our citizens thrive. This is what will lead us toward recovery.



Entry filed under: Economic Development, Economy, Jobs & Employment, Small Business. Tags: , , , .

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