Caulk Won't Patch Up This Economy

Obama, wants to give small business tax credits as an incentive for hiring. In addition, he wants to spend even more "billions" of taxpayer money to put people to work making American homes more energy efficient. In this "cash for caulkers" plan, Obama thinks the economy will rebound if we would just hire some of those "caulkers" out there who are desperately in need of work. You see them all the time. Men standing on street corners with their white coveralls and caulk guns, holding signs; begging for work.

What Obama doesn't seem to be able to get through his thick head, is the fact that small businesses -- the ones who employ almost 70 percent of this country's workers -- won't begin hiring until the uncertain future clears up. The current political environment has literally put hiring on ice. Small businesses don't hire because it is fashionable or something that they do or don't do because of the way they feel that day. They hire people out of necessity. That necessity is born out of how much business activity they have. They also have to considered the financial impact of each new hire.

Earlier this year, another phase of the minimum wage increase took effect. This increase was nearly 10%. That means that for every 10 workers, the equivalent of one worker's salary was eaten up. I am quite sure that many small businesses with 10 or more employees thought twice about hiring anyone with this change about to occur. They knew it would eat into their payroll expense and reduce their profits.

Additionally this year, many small businesses saw their state and local taxes get hiked. That, too, reduced their profits -- profits that were already down by as much as 30 to 50 percent because of the recession.

Looking forward, those same business owners are understandably gun-shy because of all the political maneuvering they see going on in Washington. All a small business owner can see ahead of him or her are taxes and penalties that, in effect, would punish them for hiring full time employees.

Cap and Trade will probably jack their energy rates up. So, some of the money that could be used to hire a new employee could be eaten up by increased energy expenses. For sure, some businesses -- those making over $200,000 a year --- will have increased income taxes as a result of the Bush Tax cuts expiring next year.

Then, there's health care reform. Almost every business will either have to provide health care or be fined. For some small businesses, this could be the straw that breaks their backs. So, what's their alternatives? Well, hire temps to avoid the health care mandate against full time workers. In fact, we saw an increase in temporary help in the last unemployment report. My guess is the temporary worker numbers will continue to rise while full time workers continue to lose their jobs.

Lastly, this government has plans to put "card check" in place which could force many, if not all, small businesses to pay union salaries which are substantially higher than minimum wages.

The business environment is incredibly negative right now due to this President and his Democrats. And, it is this negative environment that is causing business to think twice about hiring. Taxes might lead small businesses to the well; but, when they calculate all the costs and risks, I doubt that they can make them drink.