Monday, July 9

Want to create a million new jobs in a month?

A few days ago writer and blogger by the name of Charles Hugh Smith penned a thought-provoking piece titled "Why I can't hire you." Whether you're looking for a job, a small-business owner or simply a taxpaying employee worried about the nation's deficit and taxes, it's definitely worth reading.

Summary: Say I own a small "mom and pop" business, and we're very busy. I think we could increase revenue if we hired a couple of employees. Now suppose you're a hard-working, skilled person who's looking for a job. Unfortunately, in the current economy it would be crazy for me to hire you, because the cost and risk of doing so far outweigh the likely benefit to me.

He then recites a very long list of the tasks a business owner takes on when he/she hires even a single employee. It's depressing and daunting, and as part owner of a small business myself, I completely agree with him. The red tape and reporting requirements just for taxes alone is shocking--and that's without a single "outside" employee.

In other words, there's a huge disincentive to hire that first outside employee. Of course once a business has, say, 50 employees, the marginal cost of hiring number 51 is small. It's that first one that's the high hurdle

Would you like to create a million new, private-sector jobs almost overnight? Exempt businesses with less than $300,000 in annual revenue from almost ALL reporting, tax and licensing requirements. Let them treat employees as contract labor, meaning employees are responsible for paying their own Social Security and withholding (artfully named a "self-employment tax).

Many small businesses wouldn't exceed the revenue limit for years. But when one did it would have enough employees and revenue that the cost of complying with all the red tape would be spread over more employees instead of just one. That way the owner wouldn't have to overcome such a huge financial and time hurdle to hire that first employee.

I can hear statists and bureaucrats everywhere wailing already: "Oh, we could NEVER do that, because...[insert bullshit reason here]."

Hey, do you want to create a million new jobs in a month or don't you? The truth is that bureaucrats would rather people stay unemployed, because that means job security, promotions and power for the bureaucrat.

Can anyone guess where that road leads? I knew you could.


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