A potential wave of new regulation and higher taxes may be scaring many businesses from hiring, prolonging any rebound in employment, say business groups and economists.
The prospect of increased federal and state regulation and taxes has been particularly disruptive to the hiring plans of small- and medium-sized businesses, which have historically generated about two-thirds of the nation’s jobs.
“I don’t really see the private sector hiring much in the next few months,” says Brian Bethune, an economist at Global Insight. “For the small-business sector there is just too much uncertainty about what happens beyond 2010.”
For a small business it costs $ to create jobs – that means less income now. If taxes are going up the business owner would rather have the income now than later – hence no investment and no jobs. Just hunker down – milk whatever profit one can in this environment (work more rather than hire) – wait and see
I have often thought that if the government were not trying to have a perfect economy, there would be a better economy. If they could promise to stop tinkering and just let things stand for ten, or even just five, years, businesses would know what they have to deal with, even if some things were a royal pain. It is hard to walk with any degree of speed if the ground threatens to shift at any moment.
This is certainly true here. No employers are hiring in light of huge threatened taxes by all levels of government. So far on the table locally: A 1000+% percent increase in the unemployment tax, from $90 per employee to $1000+ per employee; substantial raises in real property taxes; an additional 2% surtax added on to the already exhorbitant sales tax to aid the counties; and an additional 50 cent or more tax per gallon of gasoline (supposedly to fund “development of alternative energy,” in reality, another gimmick to try balance massive deficits) that will take our gas prices over $4 a gallon.
Most businesses are at this time planning for implementation of additional layoff or closure plans if these things go through. Certainly the increase of the unemployment tax will trigger substantial further waves of layoffs and closures.
They say the recession is over. However, the depression is just beginning.
On a brighter note, our state finally this week got its allocation of swine flu vaccine which will be available to the general public instead of just “essential workers” (read, union government employees). If there had been a real epidemic, half this state would have been dead months ago. The mal-administration of the H1N1 situation makes Katrina pale in comparison, but there is absolutely no press on it. At this point you have to wonder, who is running this country? It is totally out of control.