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Policy Matters: Weighty Perceptions
a weekly column
I’ve been hearing a lot about jobs lately. I know you have, too.
The politicians are talking about them almost without even pausing to breathe. Which leaves the media types equally breathless, as they compete with each other for the best in economic wisdom at the fastest words-per-hour.
It makes sense. People are frightened of a world without jobs. Politicians ignore frightened people only at their own peril.
All of this leaves me wondering what’s going to have to happen before our nation’s leaders make the connection between jobs and microbusinesses.
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This week's news briefs
Time To Bring Microlenders To The Table
Over the past few months, while a horrified nation watched the financial markets implode before their unbelieving eyes, the microenterprise development industry has been engaged in a certain amount of throat-clearing and hand-waving. The Association for Enterprise Opportunity (AEO), the national trade organization for the industry, has repeatedly (if a bit diffidently) pointed out that microlenders are still alive and well. The AEO has also pointed out that it is a mistake to ignore microbusinesses when contemplating ways and means for getting the economy back on its feet.
More recently, a group of the nation’s largest microenterprise development outfits, along with the AEO and the Aspen Institute, have been making progress on crafting and tweaking their programs to help their clients deal with a faltering economy and to expand their reach to even more microbusinesses. The one thing that has always gotten in their way has been a single-minded focus on low-income microentrepreneurs that seems to be waning. For example, the focus of the AEO’s annual summit this year was encouraging the microenterprise development industry to take its place in the larger community of economic development officials and organizations. The question that remains for the industry now is how to obtain a seat at the larger table of small business financing solutions. When that problem is solved, with appropriate support from state and federal policy makers, then perhaps microbusinesses will be several steps closer to the financing products they have been waiting for.
Procurement and Micros Not Mutually Exclusive
Now that President-elect Obama has added a bit more in the way of detail to his public pronouncements about his economic plan, we learn that he hopes to embark on the largest series of public works projects since FDR. Repairs to highways and bridges, renovations to schools, access to electronic medical records for hospitals and doctors, and more. And, in carrying out all these projects, there will be much money for those businesses hired to do the work. It would be nice if microbusinesses got a shot at that particular pie for a change.
It seems unlikely that Congress will include funding for the SBA to hire more procurement center representatives to advocate for small businesses with federal agencies. Even if they did, it is doubtful that streamlining procurement processes and procedures to make them more microbusiness friendly would be on the agenda. Of course, selling things to federal or state government is not the only way that microbusiness owners stand to reap the benefits of any proposed economic stimulus. Any act on the part of the government that generates jobs and improves spending activity among consumers will be good. But the fact is that first-hand beneficiaries of President-elect Obama’s proposed orgy of public works spending will get a much larger share of the pie than those firms that have to wait around for second or third-hand benefits. It would be good, for both microbusinesses and for the overall economy, if state and federal contracts were spread among as broad a pool of small firms as possible and that includes even the smallest among them.
Survey Says Micros Aren’t Doing Too Badly
While there is a certain amount of hyperventilating among microbusiness advocates because millions of them may be subject to ruinous mortgage payment resets in the near future, most microbusiness owners have other problems in connection with the current state of the economy. That was the principle finding of yet another member survey, entitled “Housing and Economic Survey: A Micro-Business Perspective,” that was released last week by the National Association for the Self-Employed (NASE).
A few interesting tidbits from this survey: to begin with, 70% of survey respondents reported operating home-based businesses, a finding that might cause one to ponder the accuracy of the Census Bureau finding that only about half of the nation’s businesses are home-based. It is also interesting to note that 71% of microbusiness owner respondents say their tiny firms provide their primary source of income. A timely reminder to economists and lawmakers that just because a firm is small, that does not mean it doesn’t matter. Getting back to the economy, microbusiness owners report that their biggest worry right now is that slowing sales and reduced revenues could force them out of business. For most, the housing situation is not a problem: 84% of microbusiness owners also own their own home and 85% of them currently have a mortgage but the overwhelming majority of those mortgages (70%) have fixed rate mortgages that will keep them safe from the payment shock that threatens holders of more exotic home financing products.
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