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September 15th, 2011
06:53 PM ET

Letters to the President: #969 'The challenge for small business folks'

Reporter's Note: President Obama is trying to gin up public support for his new jobs plan, and I’m writing a letter a day to the White House. So we’re both busy.

Dear Mr. President,

I’ve been watching you running around the country trying to sell this latest jobs plan of yours, and I started wondering: Why wouldn’t some small business people jump all over this idea of incentives for hiring new workers? I mean, after all, that’s money in the bank. Hire a veteran; hire a person who has been out of work a long time; heck, hire almost anyone, and you might get help from the government to pay for it. Sounds pretty good at first blush.

But as I was thinking about that, I remembered something I learned many years ago: The difference between what most of us think a job costs, and what it really costs our employers is pretty darn huge. Hiring someone for say, $20,000 a year, actually costs an company more like $26,000 or $27,000 or more. The higher the pay scale, the higher the related cost.

Several guides I found online from seemingly credible sources suggest that adding any job actually means spending somewhere between 20 to 30 percent more than the salary to cover all the taxes, benefits, supplies, workspace, etc.

I know, I know, your plan is aimed at helping with some of those very costs. But I’ve talked to too many struggling, small business owners, who have been worried about just keeping the doors open for the folks they already have. Adding more, even with genuine incentives from the government, clearly strikes some of them as just too risky; as a bargain they can’t afford.

Unless you can overcome that fear, I’m not sure you’re going to find a lot of support in that crowd. And unless they buy in, even if you get your jobs bill passed, their lack of commitment could undercut any results you are hoping for.

Just something to think over.

If you tried to call me yesterday, btw, I’m sorry I missed you but I was at Virginia Tech to do a fascinating story about a car these researchers are working on which, no kidding, can be driven by blind people! So cool!

Regards,

Tom

soundoff (One Response)
  1. Kathleen

    Tom,
    Thank you! Thank you! Thank you! for stating the obvious regarding the plight of small business in this country right now. I work at a small preschool that my sister owns doing the bookkeeping and other administration. We're having difficulty just keeping the doors open for a variety of reasons. One is government regulation of child care facilities that makes it almost impossible to make enough money to break even. We've been open for four years and have yet to break even. My sister and her husband support the school from his retirement savings. All our teachers are retirement age but do what they do because they believe that what we're doing is important for small children and their families. The amount of taxes, unemployment and workmen's compensation insurance we pay is unbelievable. We're very popular and are always full but we'd have to price ourselves out of the market to make any money. Isn't there anyone out there who can explain to the media folks what it's like to own a small business today?

    September 16, 2011 at 10:34 am |