No, not Steve Jobs. I know you love to hear about your favorite stock Apple Inc. (NASDAQ: AAPL). It sure has defied gravity and the market as a whole, despite news of Amazon’s tablet competitor and global demand worries. I like AAPL, but I wouldn’t build my portfolio around it solely based on the fact that it’s your grandma’s, uncle’s and next door neighbor’s favorite stock too. That means any stumble on its path to even greater global domination could be exaggerated. On to more important things… Congress and Obama want to fix the dismal US JOBS picture. But how? Probably not the way they want to do it and not the way they will try to do it.
Ben Bernanke is going around telling people unemployment is a national crisis. He is also saying he doesn’t have the tools to help. Congress wants to create government programs to “retool” or retrain the labor pool. They also want to give businesses a tax break. Sounds good on the surface. But how does that help get demand going for the products and services businesses provide? What about hiring – will these measures actually cause hiring? I will speculate a little.
As a small business owner, I know what it takes to get me to hire a new employee. Promises of more demand from the government won’t do it. Now if the phone starts ringing and old clients start asking about new programs, that’s a different story. How about a lower payroll tax? I think this is a waste. Small business owners aren’t making the kind of profits they would like these days, so that little extra money will go right into the S Corp owner’s pocket. What about big business? Giving them tax breaks right now is pure nonsense. They have the cash to hire if they want. So if Uncle Sam focuses on small businesses, how can he help? Money, that’s how! Congress should pick up the tab for new workers and IT CAN.
Let’s work through a reasonable scenario: Congress can spend $48 billion over the next 24 months to create one million new jobs. So we add to the national debt – it’s $14 trillion already. This money is peanuts compared to what we spend fighting the Taliban and securing Iraq and the bailout we gave big banks a few years ago. The math is easy. Start with $2 billion a month. That’s 20,000 salaried employees making $50,000 a year for two years. Since Congress won’t agree to foot the entire bill for a new employee, let’s cover 50% of each new employee’s wages for two years. Now we created 40,000 long-term positions in a month. Let’s do this for 24 straight months and we only spent $48 billion to generate 960,000 jobs. We can probably double that easily and spend $100 billion to put 2 million people to work.
Let’s open this program only to businesses with under $100 million in revenue to make sure it hits its intended target. Put a cap in place on the number of employees a business can hire under the program and you have something raw, but relatively viable. I can tell you with certainty that small business owners will start hiring if they know a 50% tax credit is coming for their new employee for two straight years. Call your congressman