The following is in response to Marianne Brunet’s article, Are Small Businesses the Engine of Job Growth?, which appeared last week:
Dear Editor,
All Brunet did in citing Haltiwanger’ research was to argue that small businesses don’t create most jobs. She then worked hard to prove this empty point. It took a bit of word twisting – and presumption – to do it.
Empirically, I believe it is well-established many small businesses fail. Also, it is obvious that the ones that do make it may become vital in creating jobs. It just depends on what you are trying to prove.
Who says that all we need to do is to focus on small businesses? Someone who referred to small businesses as the “engine of growth” did not necessarily mean “at the exclusion of all other businesses.”
Small businesses are by definition a long term engine of growth. If they can’t get traction in the early years, they may never survive to be the larger job creators.
Another way to say it is this: It takes a lot of start-up small businesses for a small number of high-growth firms to prosper and contribute to job creation. All big employers started as a small business. So, how was Reagan wrong when he said “a vigorous small business sector is essential to a productive and competitive economy. … Most of the new jobs actually created are in small private enterprises.”? Does Brunet lean away from him politically? If so, how objective can this article be?
Reagan is wrong, but Obama is not when he said “small businesses have always formed the backbone of the American economy”? This is the implication. Where is the balance?
Yes – equal emphasis should be directed at large firms too to achieve the goal of job creation. Why is it that large successful businesses become pariahs? For instance, the current administration has made it fashionable to refer many profitable companies in pejorative terms (“Big oil,” “Big energy,” “Insurance Companies,” “Wall Street” etc.)? Is this business or job friendly?
It’s as if these businesses are bad because they are profitable. Should businesses not strive to grow ever larger? If they are bad, which businesses are bad, specifically? What did they do wrong?
It is empirically obvious that it takes a lot of small businesses to be born for some high-growth job creators to survive and prosper. I’m sure Reagan would have said as much. If this is true, we still need to focus on being friendly to small businesses. Why is it then that current policy makes it very difficult for small businesses to start-up (they must deal with double taxation on Social Security, worker’s compensation, outrageous tort risk and now an unknown liability for healthcare expenses)?
If larger businesses are so important to jobs, why don’t we also treat them as partners in job growth?
Based on this article, it seems we should now pick the businesses to support based on the size of the business.
Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon. (Winston Churchill)
Larry Eppolito
Chelmsford, MA
P.S. Advisor Perspectives has great articles!
