Small Business

Why This Business Owner Isn't Hiring in 2010


Because he expects his small business consultancy's growth to be flat, Gene Marks says he won't be making any full-time job offers next year

I recently learned some very upsetting news. No, I'm not talking about the 10.2% unemployment rate. I'm talking about the fact that almost 2.5 million people watched MTV's Jersey Shore reality show last week. That's 2.5 million! And the numbers have been rising with every episode. These people are clearly part of the unemployed masses we keep hearing about. They're obviously pleading for help. They're desperate with boredom. Desperate enough to watch Jersey Shore. Sammi has chosen Ronnie over Mike. Danny fired Angelina from the store. Jenni upset her visiting boyfriend when she told him that she kissed Pauly. And this is from one episode. Clearly, these kids, and their fans, need jobs, people! Can't fellow small business owners do something about this? Don't we employ half of the people in the country? Can't we make room for a few more? Friends, we can hire these people. We must put them to work. We must save them. I know what you're going to say. Like most business owners, you're really not in a position to hire anyone. I have the same concerns. Too Many Uncertainties

Like employer taxes. I'm frightened by the trillion-dollar deficits and bailouts and wonder how these are going to be paid. Right now the Administration is proposing income taxes that are still equivalent to the rates during the Clinton era. I'm not sure how long this is going to last before the rates start going up. And I'm reading that many states are quietly raising their unemployment taxes. Some experts are estimating that state unemployment taxes could double or even triple in the next year or two.Is an increase in the Federal Unemployment Tax rate on the horizon? One expert thinks so. Here's a good thing: In 2010, Social Security taxes have been frozen. Not that Jersey Shore's Mike, who refers to himself as "The Situation," has a prayer of ever earning more than $40,000 a year. But at least it's good to know that the maximum salary amount will stay at $106,800 and the tax rate itself will stay at 6.2% (plus another 1.45% for Medicare, which is not limited by the maximum wage). Of course, inflation may change Mike's "situation." Increases from its record-low levels will ultimately cause increases in the cost of living adjustments. And this may result in higher future taxes. One columnist thinks the potential unfunded liability of Social Security will result in significant tax increases.Another disagrees. I can't be certain that these Jersey Shore people won't come to work every day hung over from last night's partying. So I'll have to deal with this uncertainty too. And speaking of uncertainty, there's health care. I admit that the cast from Jersey Shore look pretty healthy. But hey, what if Snooki has another run-in at a bar and needs medical treatment? The new bill, as it stands, calls for an increase in the Medicare tax. And it's going to penalize me if I don't provide health insurance for my employees. But then again, there are going to be tax credits for small businesses. But then again, the insurance industry may raise its rates. But then again, the Congressional Budget Office claims the new bill will reduce the deficit by more than $100 billion between 2010 and 2019. I feel like all the experts are clueless. They must be watching too much Jersey Shore. How can I hire anyone in this environment?

More Productivity

No matter what the environment, why would I want to hire additional people when I can get more work out of the people I have? A columnist recently wrote that "productivity—output per hour of work—rose substantially during the recession" and that, in the last two quarters, "productivity in the nonfarm business sector grew at a shocking 8.1% annual rate." My people work hard. But they can be doing more. And, as a manager, it's my responsibility to get the most productivity out of them before adding more resources to the company. I'd rather invest in better technology and training than add new employees. Plus, it's so much easier just to subcontract the work instead of hiring new employees. Popular Web sites make it easy for me to find contractors with specific knowledge. And, because of the recession, there's a ton of them out there. And new technology makes it easy for them to connect to my office to do the work from wherever they are. So why should I hire someone full time named "The Situation" when I can get a contractor to do the work for less of a commitment on my part? No, No, and Still No

Can't I do anything to save these poor kids? Must they be forced to party every night? Do I have to let this environment of rising taxes, unknown health costs, and the temptation to outsource instead of hiring full-time workers get in my way? Can't I still give at least one of these poor souls a job? The more I think about it, the answer is still no. And it's not just my aversion to tattoos. It's really because my company, like many other small businesses I know, isn't growing right now. The new normal seems to be flat. I see the government holding summits and spending money on internal projects to spur job creation. But I know this is just artificial. Banks are borrowing money at insanely low rates and stuffing them into T-bills, rather than lending to small businesses. This is going to take time to change. I heard tax credits to spur job creation were being considered. But if there's no expected growth, why would I want to hire? I give up. The year 2010 is just not going to be a time when my small business can hire anyone. Not the guys and girls from Jersey Shore. And not any of their 2.5 million fans. But don't worry—at least one cast member has confidence. He says: "Far as I know, everybody loves The Situation, and if you don't love The Situation, I'm gonna make you love The Situation." Phew. At least someone's feeling confident out there.


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