Free Markets, Free People

Why Are Businesses Not Hiring?

We’ll soon be treated to the spectacle of a White House job summit in December.  Yes, almost 11 months into his presidency, Barack Obama has discovered that the public is most concerned with the economy and jobs – not health care.  Not the environment.  Ironically, it is most likely those two things at which the administration and the Democratic Congress have been working so hard to pass into law that have caused the job situation and economic outlook to remain so bleak.

While President Obama and congressional leaders say they would like to do more to spur job creation, economists and business executives warn that their plans to impose new health care and climate-change costs on corporations would have the opposite effect.

The initiatives, according to this analysis, are likely to overwhelm any positive impact on jobs from stimulus measures by giving businesses a reason to keep laying people off.

The House’s health care bill would raise the cost of hiring in a straightforward way: by charging businesses a new payroll tax of up to 8 percent if they do not provide health insurance to workers. The Senate plan would impose smaller fines on those same employers.

The House-passed climate-change legislation would not add directly to the cost of hiring, but would raise energy prices, which are a major cost of doing business. Economists say that many companies would react by hiring fewer people.

As we’ve mentioned numerous times, businesses want, in fact usually require, a stable economy before they begin hiring or expanding. They want to see trend lines headed up and they also want a climate that is conducive to expansion and thus hiring.

With these to major bills looming and, as the Washington Times notes, major new costs a part of their passage, businesses aren’t going to
commit to doing anything until they understand how those new costs will impact them.

So don’t hold out much hope for anything major to come out of the job summit. It’s mostly for show – a way to show concern. If the administration really wanted to see jobs created, they’d kill the two monstrosities in question and provide incentives to business (tax cuts, tax incentives, etc) to spur hiring. Instead we’re much more likely to see talk about a “second stimulus” and other big government “solutions”.

Just don’t forget the promise of the last “stimulus” – it would stop unemployment at 8% and “create or save” millions of jobs.

The official unemployment rate is 10.2%.



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17 Responses to Why Are Businesses Not Hiring?

  • I was talking to a business owner in Nashville earlier in the week. I’ve been involved with them for years as an advisor, so I know their history, and it’s been generally positive. They are considered the leading vendor of packages for their target market (physical therapists).

    He said they deal with over a dozen large hospital chains, and almost all of them had spending freezes. I’ve seen the same in my own consulting practice – healthcare companies are like deer in the headlights. They have no idea what healthcare as an industry will look like next year, not to mention further down the road.

    So they’re just sitting on their money waiting on some kind of resolution so they know where to spend and invest. The healthcare bill process that was supposed to be done by May, then September, then November, and now next year is paralyzing an entire industry. Thanks, Obama.

    If Obama were an opportunistic politician, ala Bill Clinton, instead of a fanatic ideologue, he would kill the healthcare bill and cap-and-trade. The result will likely be a large release of latent demand in healthcare and energy industries, as they get back to business as usual instead of paralysis. That would likely stimulate the economy and start reversing the unemployment in the short to medium term, perhaps in time for the 2010 elections. (Let’s not talk about the long term – too depressing.)

    • Now imagine yourself a business in California, where on top of the Pelosi-Obama-Reid dynamic, you have the Governor-Assembly-Senate (GAS) conspiring to ruin thet state with their own mandates and wacked out lefty policies.
      Along with a partner, I own a small business, and I am committed to not hiring ANY employees at all.  We outsource everything we can’t do ourselves.  And we’re working hard at technologies to allow us to use less of that as well.
      Our business is growing, and our competitors with all the employees are crumbling.
      You can still make a lot of money, individually, in a POR economy, but it you are not a business owner or self employed, watch out.  The “friends of the working class” are going to give you a whipping!
      I feel sorry for the poor saps at my old workplace, who voted for this crowd because they believed the promises of “making work pay” and all the other BS the left tossed at them.  All the tax credits in the world won’t help them if I won’t hire them.  And I’m not hiring!
      Think before you vote, 2010!  And especially 2012!

      • I feel your pain.
        My employer (a mid-cap) is only hiring in India and China.  The only HR activity in the US are layoffs.
        Hope and Change are merely words to deceive.

  • Businesses do not traditionally hire in the middle of a looting.

    When you see Harry Reid running down the street clutching a big screen flat panel TV, you’re not going to be focusing on resumes.

  • Time to bring another Clinton-era slogan out of mothballs:

    “Style over substance.”

    Imeme and his gang have decided that they don’t have to try to meet the needs or expectations of the American people, or indeed even put in the appearance of really trying.  Rather, they are playing to a very small, very select, and very friendly audience: MiniTru.  Imeme needs merely to announce that he’s going to hold a “jobs summit”, and MiniTru dutifully sighs with adoration and reports that  he’s on the job.  It’s the same as his decision about A-stan: he announced that he was being “deliberative” and “taking his time to get it right”, and MiniTru reported it as such along with a hefty dollop of praise for his (sigh!  flutter!) mighty intellectual powers.  It’s a great thing when SAYING that you’re doing great things is a totally adequate substitute for actual achievements (cf. Nobel Peace Prize).

  • Don’t I know it. I have not had a “Real Day Job” since 2005. This blog is my job at the moment. Although the pay, just isn’t that great. I like what I do and every now and again, I get a decent donation. 🙂

  • The business/corporate model requires potential for economic growth and productivity of its employees; the public model (ACORN) requires distress.
    Next question?

    • That’s about as succinct a description of the difference between conservatives and liberals as I’ve ever seen.

      • Thanks, Doc!
        That’s because conservatives/libertarians actually do COMMERCE. “Liberals” run public advocacy groups and the media/entertainment industries; to them, people actually working for a living are CHUMPS!

  • I’ve posted before that the only hope for the Democrats is to abandon virtually everything that Obama said during the campaign last year and try to revive the economy before Election Day.
    Working against all of this is Nancy Pelosi who is telling Democrats privately that we need yet another “stimulus” because nobody is seeing any results from the first “stimulus.” You don’t need to be Albert Einstein to know that “doing the same thing over and over again and expecting different results” is insanity, but nobody ever said San Fran Nan was sane.
    If the Democrats are going to admit failure with the 1st “stimulus,” they should redirect the money that hasn’t been spent yet to trying to revive the “private sector,” but nobody in the White House has enough experience with the “private sector” to now how to do that. “The Won”-s collection of “community organizer” misfits may know how to run a campaign but are clueless when it comes to actual governing.

  • Businessmen want low taxes, reasonable regulation, and sound money.  But they would be willing to expand their business even with high taxes, regulations, and inflation IF, they knew that the rules would not change.
    What business craves more than anything is regularity.  They need to know that the rules won’t change in the middle of a costly expansion and the rug be pulled out from under them.
    That is why constant “reform”, change, and an uncertain bunch in the capital will always lead to a halt in all new hiring and business expansion.
    But, of course, it is too much to hope that this gang in charge ever took or remembered basic Econ 101.

  • This post has been linked for the HOT5 Daily 11/29/2009, at The Unreligious Right

  • They don’t just want a stable economy, they want a stable government.  Change is the opposite of that.  Making sweeping alterations to the way the country operates — including de facto nationalization of major automakers and the entire medical industry — make them entirely unable to predict anything about their future business, including whether or not the government will simply take it from them.
    Dig in for the long haul, because this recession won’t end until Obama is out of office.  Once the business world have been spooked, you can’t bring them back around. (See: Carter)

  • Clinton is credited with riding the “it’s the economy, stupid” theme to a victory.  And yet, he tried to pass health care reform during a downturn.  I believe that if he’d waited and tried working on the economy first, he’d have been able to ride the dot-com boom into a much easier case for health care reform.  Perhaps a focus on jobs and the economy that didn’t include talk of health care reform and a massive tax hike would have also left him with a much more agreeable congress, as well.
    In that sense I think that history is repeating itself.  Seeing that he had a pretty large Democrat majority in congress, Obama decided to try and ram through his agenda before the economy undermined it.  But it was already way too late.  Perhaps, if he’d worked on stabilizing the economy (in ways that didn’t involve massive spending increases and skyrocketing unemployment) he may have entered 2011 with a better economy, a majority in congress that survived the 2010 elections, and a much more receptive environment for health care reform.
    Maybe the key to not letting a good crisis go to waste is to make sure you do not treat it as a crisis.  Or that you don’t respond to the crisis like a clueless amateur, anyway.

  • Obama: “My Administration is the only thing between you and the pitchforks”
    Wall Street: “Sorry, but I think those pitchforks are for you”

  • The “official” unemployment rate is 10.2%, the unofficial rate is…MUCH HIGHER!
    That doesn’t cover the UNDEREMPLOYED, like the college graduates working at Circle-K…