What’s behind this paradox?
[Related from CNBC: Why Fewer Americans Are Starting New Businesses]
Even if you assume business owners are greedy and selfish (as some in Washington seem to imply), it doesn’t make sense that they’re not hiring more workers. After all, reinvesting those growing sales and profits should pave the way for them to make even more money.
During the early part of the industrial revolution, when machines began doing the work of people, there were some who predicted that unemployment would become permanently high. They were wrong. What we have learned through history is that companies continually seek ways to make more profit and that this always requires more people. Consequently, I discount the idea that, because of an increase in the efficiency of companies, we are stuck forever at a high level of unemployment.
Given that this situation is historically unprecedented, you have to look at what external factors may be causing U.S. companies to hold off on hiring. It’s popular to blame Washington for everything, but, in this specific case, the blame may be correctly applied. If President Obama and Congress want to get job growth going, they can do three things to help, but they can’t wait until November. I’m already worried that businesses will write off hiring for the rest of the year because of the election.
First, iron out the tax picture immediately. Waiting until after November is a bad idea. The issue is not only whether to extend or not to extend some or all of the Bush-era tax cuts; it is to decide something and be definitive. Even if it’s a “bad” policy decision, something sooner rather than later is better than nothing. Business owners need to be able to plan out 12 to 24 months. They need to be able to develop forecasts so they can figure out if they’re going to hire and how many positions to add. They can’t do that if Washington keeps debating until the last minute and then makes a policy change. Just tell us what you’re going to do and then go do it.
Second, I’d ask that Washington listen to the business owners in the trenches — the job creators, the regular people who run a grocery store, a landscaping business, a light manufacturing company — and stop the anti-business rhetoric. At least in name, President Obama has launched several initiatives aimed at helping businesses, such as Startup America and his Council on Jobs and Competitiveness.
Just this past month, the White House launched a website to gather tips from businesses on burdensome regulations. That’s good. Washington needs to listen to regular business people who can recommend what the government should or shouldn’t do to foster long-term job growth. But when the President makes speeches like the one in Roanoke, Va., last month, it seems as if he is attacking business owners and looking at successful Americans and successful business owners as the problem.