Slide in US Job Creation Confounds Analysts

As an American small businessman, It is a source of constant amazement how few people understand small business. Supposed experts and politicians alike simply do not get it.  They do acknowledge that small business is the engine that drives American job creation, but they don't have a clue what drives us. For example, Robin Harding of the Financial Times writes:

There is no easy explanation. The obstacles left behind by the financial crisis, such as falling house prices and the need of households to pay down debt, help to explain why the economy has not accelerated to the kind of 400,000 a month job growth that would bring unemployment down quickly. But it does not account for why the economy has repeatedly stalled from even modest levels of job creation above 100,000 a month.

Allow me to explain the situation succinctly. We are not stupid -- but Obama & Co. think that we are. 

Shall I elaborate?   

A small business anywhere is driven by a need to first survive and second to grow. Profit is good, but growth is profit to a small business. It is the owner's own money, which he or she has worked, struggled and gambled to obtain. If you think of us as little fat cats, you have no idea at all about small business.

Over the years, we who are successful grow and hire new people. We create not only new jobs and taxable income for the government, but we create better jobs, buy equipment and services, expand into new facilities and support sandwich shops as well as airlines and hotels. There is nothing small about small business's effect on the economy.


But we are not represented at all in Washington any not very well in 'the State House'. We are falsely vilified as supposedly not paying our fair share of taxes and specifically targeted by both the White House and the Democrat Party as sheep ready to fleece. The media, through ignorant "talking heads", has no idea about small business and frankly doesn't care. Even Conservative pundits often have no real comprehension of our situation.


Make no mistake, it is small business that Obama targets when he speaks of those earning $200,000 and more. It is simple logic that you don't increase the tax rate at $200,00, or people earning $200-250,000 would take a small pay cut to earn the same take home without paying more taxes. You have to increment it, starting at $100,000. This hits all small business people. Obama's rich buddies (GE, Ebay, etc) are not on his radar screens, they have multinational companies that move profits offshore and pay less in taxes than small businessmen/women do. Did you know that GE/NBC is employing fewer Americans every year and paid no (zero) US income taxes in 2010? Small business has no such advantage.


We don't get the tax breaks and advantages of GE/NBC. We pay in full. We can't take advantage of "tax havens" by centering profit centers in Puerto Rico, like Merck has done for decades. But we have no influence in the media or in Washington.


If anyone really cares, we'd like some security. We'd like to know what to expect in taxes and have some confidence that the government is not simply re-inflating the bubble once again, but building the economy on a solid foundation. We didn't get where we are by being stupid. Those of us who survived the Dot-com bubble and the recent CDO driven financial meltdown did so by not being stupid.


We can't invest our earnings or capital anywhere safely, as Washington has poorly protected us from bank failures, CDOs and other broker's shenigans. Real estate, Wall Street and all other forms of investment have all proved to be unsafe, and lets admit it, are regularly manipulated by those with influence in Washington.


Supposedly to help us, Washington did "Quantitative Easing". This isn't help at all, for heavens sake it is simply another tax. How is that?


Well, first it dilutes our dollars, reducing the value of our savings.


Second, it artificially increases the "value" of our investments or inventory. The price of a stock goes up, and if we sell it we pay income tax on it, but much or all of the increase in the price of that stock is due to the drop in value of the dollar. The same is true of inventory. We need to sell an item in stock at a higher price than we used to, in order to be able to be able to replace that inventory with newer, higher priced inventory. The government sees this as additional profit, and takes tax from the supposed extra profit, although to us it is just keeping up with inflation.


Third, any money we keep in interest bearing accounts earns far less than it would need to, in order to keep up with the loss in value. Of course the government still wants their portion of that interest, so we came our far behind where we started.


Remember, whenever it takes more of your dollars to buy something, that is inflation. The item or service has not gained value, your dollar has lost value.


So we don't get to advantages of multinationals, we don't have the ability to move money around the world to avoid the pitfalls of Washinton's incompetence and corruption and we are targeted by politicians right up to the White House as sheep ready for fleecing. We are vilified for not hiring new employees when we have no jobs for them to do and for sitting on money the government decreases the value of every day.


Do you still wonder why small business, the engine that drives American Job creation, has stalled?


Get out of our way, stop trying to fix things (when all you really do is help the international banks and big business) and clean up corruption. Then we'll give you prosperity, again.

 James H. Gammon is president of a small but world-leading US manufacturer of aviation fuel quality-control equipment. An engineer and mechanical designer who holds several international patents.   He may be contacted at



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