Economy Woes and Blunders
I don’t get it:
In evaluating the market’s weaknesses, the McCain team found one ray of hope: small businesses that created nearly 250,000 jobs, even as the broad economy lost 400,000.
“That’s not overwhelming job growth, but it is a part of the economy that is hanging in there. We should take care of those small business,” Holtz-Eakin said.
A top concern for those companies is health care costs, which are often cost prohibitive for a small business, affecting its ability to attract the best workers. To ease the crunch, McCain settled on a reform plan that would give employees $2,500 in government grants to go buy their own coverage. source
Ummmmmm.. Okay, I’ve been involved in start-ups and small businesses and have watched one business grow from a start-up to a mid-sized company and this is bullshit. It’s nice to see that McCain is talking about providing a $2500 tax grant for small businesses to go out and buy insurance…. but DUDE! that ain’t enough .. what does that amount to – insurance for one employee for six months to a year?
Okay but that’s really besides the point right now – the point is that small business still revolves around what is happening within mid-sized and large-sized business and while it is more apparent in the manufacturing and goods producing sectors – those sectors have an affect on the service sector as well…. here’s some data from ADP:
Employment in the service-providing sector of the economy declined 3,000, the first decline since November 2002. Employment in the goods-producing sector declined 76,000, with manufacturing employment falling 44,000, marking their nineteenth and twenty-second consecutive monthly declines, respectively.
Large businesses, defined as those with 500 or more workers, saw employment decline 51,000, while medium-size companies with between 50 and 499 workers declined by 35,000. Employment among small-size businesses, defined as those with fewer than 50 workers, advanced just 7,000 during the month.
Two sectors of the economy hit hardest by recent problems in mortgage markets have been residential construction and financial activities related to home sales and mortgage lending. Today’s report suggests no lessening of the recent strain on employment in these industries. In June, construction employment dropped 34,000. This was the nineteenth consecutive monthly decline, and brings the total decline in construction jobs since the peak in August of 2006 to 349,000. In addition, employment in financial
activities declined 3,000 during the month.
While small businesses may have gained 7,000 jobs in June, according to the NYT’s, it’s the smallest increase in almost six years. Further yet, according to the ADP’s June report if we break down the small business gains and losses by sector small business looks like this:
Goods Producing: 27,000 lost jobs
Service Providing: 34,000 gained jobs
Manufacturing lost 44,000 jobs all together – I found no breakdown.
In the goods producing sector, small businesses, medium sized businesses each lost 27,000 jobs and large businesses lost 22,000 jobs.
Even though the gains of small business in the service providing sector are 34,000 jobs while medium sized businesses lost 8,000 jobs and large businesses lost 29,000 jobs – is this absorbtion of jobs that medium and large sized businesses have found necessary to cut back on and will absorbtion of those jobs come at a hefty price to small business owners as the trickle down effect kicks in from the loss of manufacturing and goods producing jobs combined with consumer caution?
It’s not enough to point at a glimmer of hope which is already fading to make us feel better about the economy.