The problem with our proposed jobs bill is that it attempts to reduce unemployment by essentially spreading the cost of another stimulus over ten years, while providing businesses immediate savings. It is important to note many companies have survived the past several years floating on large cash assets, so money doesn’t seem to be the issue. All that cash is mostly sitting idle because supply is not a problem either. Large businesses have excess capacity, more than enough property, and continue to reduce payrolls. Small businesses would love take advantage of low-interest rates and make investments, but without increased customer demand, they cannot find a financial benefit to doing so.
Some business owners say they would use any payroll tax breaks to increase existing employee’s salaries. While this strategy does not immediately solve an unemployment crisis, it could provide a desperately needed boost to the confidence of the 91% of Americans currently working. Perhaps if the jobs bill focused on bringing the underpaid work force up to a better living wage, consumer demand might start to rise. Only once that happens will a greater portion of small companies look to hire.
We’ve been stuck in a rut for a very long time, but with the right long-term strategy we can find a way to get ourselves out of it. Times will continue to be tough for many, however, political wrestling and the costly, temporary fixes that result won’t solve our current issues or get us back to prosperity.
For more on this topic see Portland Business Journal writer Kent Hoover’s article,”Business: Demand, not tax cuts, will boost hiring“.