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Policy Matters: Godzilla Versus Sustan Storm
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I suppose, by rights, I ought to be looking for silver linings and glasses that are half-full instead of half-empty and things of that nature. After all, Thanksgiving is this week, isn't it?
Surely, I hear you say, you have something to be thankful for!
Well, yes, I have any number of things to be thankful for. Mostly, they're personal. Very few of those things for which I am inclined to give thanks originate in Washington, D.C.
But, in the spirit of the season, I'll take a brief break from grousing to ponder. And, specifically, I want to ponder those business employment data.
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This week's news briefs
Will Ambitious Obama Plan Skip Small Businesses?
President-elect Barack Obama told his radio audience during the Democrats' weekly address this weekend that he and his economic team would act boldly to deal with an economy that was generating more bad news every week. He promised to inject new life into the economy by investing in infrastructure projects and building a new alternative energy industry, in order to create or save 2.5 million jobs over the first two years of his term in office.
He'll be introducing his economics team during a news conference later today, too, but don't expect to see his small business czar among the not-so-new faces. Unless Team Obama has been unusually tight-lipped, the president-elect has not yet named his SBA Administrator. It's a curious oversight, since one of his campaign pledges was to re-elevate the SBA Administrator to Cabinet level and since small businesses are an excellent and low-cost source of new jobs. In many ways, you might look on this as Mr. Obama's first big test on small business policy. Will he continue the practices of his predecessor and ignore small businesses in the larger scheme of things? It is time for the Obama team to indicate that they know the economy will not recover without small businesses, so that the rest of us know where we stand.
Micro Employers Not Picking Up Job Loss Slack
Regular readers may recall the many times I've mentioned that, during the last recession, microbusiness employers with fewer than five employees continued to create jobs throughout ten of the twelve calendar quarters during which larger firms experienced labor market declines. In other words, it appeared that microbusiness employers were able to cushion the shock of the 2002-2003 downturn for the labor market.
The big question for researchers and economists, however, was whether this finding would turn out to be an inherent characteristic of microbusiness employers, whether their behavior during that particular downturn would turn out to be an anomaly, or whether they would behave differently during a credit-based recession (such as we have now) than they did during an asset-based recession (such as we had then). It's still early days yet but business employment dynamic data released by the Bureau of Labor Statistics last week shows that most of the net job losses of the first quarter 2008 originated from the smallest and the largest businesses -- although microbusiness employers generated almost as many jobs as they lost. But this is a dynamic we'll continue to watch as data on the steadily degenerating 2008 labor market becomes available during the first half of next year.
Kerry Prods Treasury, SBA To Help Small Firms
To say that Senator John Kerry (D-MA), chairman of the Senate Committee on Small Business and Entrepreneurship, has long been concerned about the impacts of the credit markets on small businesses is a bit of an understatement. In fact, Chairman Kerry and his counterpart, Committee Ranking Member Olympia Snowe (R- ME), have been pressing the SBA for some kind of action on small business lending for most of the year.
The SBA recently announced that it has take steps to improve the position of SBA-backed loans on the secondary market in order to improve liquidity for banks to make more loans to small firms -- but, of course, Senator Kerry's pushing had nothing to do with it. Meanwhile, Kerry has enlisted the support of Joint Economic Committee Chairman Chuck Schumer (D-NY) to push legislation that would temporarily eliminate borrower and lender fees on 7(a) loans. The two lawmakers announced last week that the bill would be incorporated into a Senate stimulus package and, along with Senator Snowe, sent a letter to Treasury Secretary Paulson urging his to use some of that $700 billion bailout money to buy back securitized SBA loans -- again, to improve liquidity. No doubt Senator Kerry is optimistic about his ability to work on this stuff with the incoming Administration but, for the many small firms struggling right now without access to capital, January is simply too far away.
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