October 7, 2012 by David K. Sutton
A Survey Of Small Business Owners Shows Demand Is Key To The Economy
On Sunday’s Up with Chris Hayes, they displayed a graphic showing the results of a survey of small business owners. The survey was conducted by Wells Fargo and the Gallup Small Business Index on September 13, 2012. The context is hiring concerns. What are small business owners thinking about and looking for when it comes to hiring more workers? — Remember, Republican presidential candidate Mitt Romney (and his entire party) believe the biggest concern for small businesses is government regulations and taxation. This survey reveals otherwise:
SMALL BUSINESS HIRING CONCERNS
- 71% Revenues/Sales Won’t Justify Adding Employees
- 66% Current State Of Economy
- 53% Cash Flow/Ability To Make Payroll
- 48% Potential Cost Of Healthcare
- 46% New Government Regulations
To be fair, Republicans would probably say that “Cash Flow/Ability To Make Payroll” is where the taxation issue comes in to play. If you tax small businesses less, they would have greater cash flow. I’m not sure anybody would make an argument against that statement, but notice that this is not the top concern of small business owners.
Republicans will also point out “New Government Regulations” but again, that’s not the top concern, in fact it’s the 5th most important concern.
The top concern is “Revenue/Sales Won’t Justify Adding Employees.” Boy, that sure sounds like an argument for demand-side economics, doesn’t it? And it should since demand-side economics is the only economics that makes sense in the first place. If the lower and middle classes (almost all Americans) have lower purchasing power, it means less goods and services are being purchased. It means less sales, hence less revenue. And it means companies not only have less money to hire workers, they have no reason to hire workers in the first place because there is less work to be done (less demand).
But Republicans want more supply-side (trickle-down) economics. They want to target the 3rd and 5th highest on this list instead of the top issue on this list.
What happens if you have government policies that target and fix the top issue on this list? — The top three issues go away and the bottom two issues become less burdening.
Government policies that grow the middle class will lead to greater purchasing power, that will increase revenues, improve the economy, and increase cash flow which leads to more jobs.
If the economy is good and companies have increased cash flow health care costs are less of an issue (not saying rising health care costs are still not a concern), and government regulations will not only remain at the bottom of the list, it will probably not be cited as a reason a company is unable to be successful.
It’s all about the consumer. If the consumer can spend more money, the economy, business, and jobs picture looks a whole lot brighter.
Disclaimer: I like to verify statistics before posting them because I don’t assume Up with Chris Hayes (or any other show, publication or media entity) gets it right every time. I was unable to find the results of this survey online. If anyone has a link, please include it in a comment below. I decided to post this article anyway because regardless of the survey results, I believe my explanation to be sound; why demand-side economics is the only sensible approach to fixing the economy. Small business owners have no inherently greater authority on government regulations, taxation or stimulus. Of course the same can be said about me, and that means you need to make up your own mind.
UPDATE – October 8, 2012 at 3:44pm:
I still haven’t found a matching survey to the one presented on Up with Chris Hayes, but Left Call reader @Floridaline pointed me in the direction of the following Wells Fargo – Gallup Small Business Index survey:
What kind of things would make you more likely to make capital investments in your business over the next 12 months?
- 80% Better sales and revenue outlook for your business
- 73% More certainty about your business’ operating environment
- 70% Lower federal taxes
- 62% Fewer government regulations
- 56% More affordable technology
- 52% Special government tax credits
This “new” survey further enforces my argument for demand-side economics. Taxes and regulations move up a little higher in this survey, but “sales and revenue” is still at the top of the list.
UPDATE – October 8, 2012 at 4:14pm:
Thanks again to @Floridaline for continuing to track this down. Below is the survey question that was featured on Sunday’s Up with Chris Hayes. I know why I didn’t find it on my initial search. The graphic they used on Up did not identify the correct date of the survey question. If I recall correctly the graphic said something like “January – September,” which I did think was a little odd when I saw it. Anyway, here’s the survey question:
I’m not sure why they focused on those two issues (Health Costs, Regulations) for the article title. That is really misleading.