Wednesday, June 30, 2010

Small Business Finally to Get Help?

To follow up on this morning's ADP release, here are some more details as to why this time (yet again) is different (i.e. worse).

Unlike during the 2001 recession when small business employment "hung in there" with less of a downturn than mid and larger firms (my guess is this was due to those individuals being laid off from larger firms, starting their own smaller firms) and led the recovery, small businesses have shed almost as many jobs as mid-sized firms and almost double large size firms.

Which is why it is nice to FINALLY see legislation targeting this area. Per the NY Times:

Senate Democratic leaders introduced their long-awaited small-business jobs bill on Tuesday — and in an indication of how urgently legislators viewed the matter, the Senate voted to begin debating the measure even before its details were finalized.

The bill, crafted jointly by the Senate’s finance and small-business committees, makes many temporary, and some permanent, changes to popular Small Business Administration programs that provide government guarantees for loans to small firms, including higher loan limits and higher guarantees.

Source: ADP


  1. This works if a lack of credit is the problem. The Atlanta Fed has done some interesting research which seems to indicate the problem is a lack of demand as opposed to credit.

  2. This is terrible news. The process of creative destruction is working like magic - many "small businesses" are 2 or 3 person construction outfits. They're failing because we need less of what they make.

    Legislation that seeks to perpetuate these dying industries is the height of insanity. It encourages the building of more homes and will further delay any potential recovery.

    Leave it alone.

  3. Today I saw a Craigslist ad offering $10/hr for someone who'd help rehab and old trailer (must be knowledgeable with electricity.)

    It seems to me that creative destruction means working for less & cutting expenses where ever possible: no tax withholdings, no insurance, no sba loans, no interest, no records, etc.

    Economic circumstances dictate this.

    People who understand are in cost-cutting mode, and are getting by.

    People who don't understand are in stimulus mode.

    The real economy will become informal so long as the government continues to be irrational.