Band-Aids Don’t Help

The Basic Problem

Do a Google search on small business promotion and you will be amazed at the incentives offered by local and state governments. They are partnering with the Kauffman Foundation to offer FastTrac® entrepreneurial training for new ventures and growth ventures. They are sponsoring business plan competitions to offer modest cash awards. They are investing in business incubators to make low-cost start-up space available. Why the sudden enthusiasm for entrepreneurs? Because we have a serious employment crisis in the United States. Our private sector has lost over 10 million jobs since 2007, even before the banking crisis. The average period of unemployment exceeds 35 weeks and many of the unemployed are no longer counted in the ranks, as they drop out of the market altogether when they lose benefits or become completely discouraged. The initiatives offered by state and local governments are too weak to address our root problem: uncertainty around rising taxes (both the magnitude and the timing of anticipated increases), the implementation of healthcare reform and other measures, including lack of access to capital, deter small businesses from hiring. Until the federal government gets serious about consistent, responsible long-term policies for economic growth, band-aids from local governments won’t address the unemployment crisis.