May’s employment data is worse than we think
The recently released Department of Labor May report on employment revealed a shocking number: New jobs last month rose by only 75,000, dramatically below expectations.
Even worse, the number of new jobs created in March and April were revised down by tens of thousands from the initial Bureau of Labor Service reports. The public is now being warned that a recession might be on its way because big employers are cutting back on production and growth.
However, as dismal as the overall employment statistics might be, the situation with small businesses is far more worrisome.
Small businesses, those with fewer than 50 employees, are responsible for most net new jobs with the majority of these coming from startups with four or fewer employees.
Small businesses led us out of the Great Recession by adding workers during the bad times when big corporations preferred only minor workforce growth as they waited on the recession to be clearly over.
A vibrant small business economy is clearly essential for our nation’s financial health in good times and especially bad times.
That’s why a different analysis of jobs in May, barely mentioned in the media, is even more alarming than the Labor report figure universally quoted.
The ADP National Employment Report is a highly respected private sector assessment of the nation’s nonfarm private sector payroll data. In theory it is measuring the same state of jobs in the country but its methodology yields results that can be considered more accurate.
According to the ADP report for May, only 27,000 total new jobs were created in the month. The even more shocking statistic was that small businesses shed 52,000 jobs last month. Most of this job decrease, 50,000, came from businesses with fewer than 20 employees.
The ADP report also shows that the small business job loss wasn’t just in Main Street retailers.
Thirty-three thousand came from the “goods-producing sector,” with small businesses of fewer than 20 employees accounting for 24,000 of these lost jobs.
Not only did existing small businesses bleed jobs in May, the crucial new startups were not making up for the losses. In fact, our nation is in a period of very low new small business startups.
The red lights are blinking. The sirens are going off.
If a new recession is around the corner, our small business sector might not be able to stave off a depression this time.
As we move through this political campaign season, our elected and would-be elected leaders need to start focusing on this serious economic problem.
We don’t need any more cheap talk about too many regulations. The Trump administration hasn’t let the number of regulations grow in the last two years and some have been rolled back. So, regulations aren’t to blame.
Our government’s economic policies and failure to address serious national problems are at fault.
The 2017 federal tax law has given us a rapidly increasing national debt in order to give it’s $1.5 trillion of benefits to big corporations and the wealthy, neither of which helped most small businesses or gave the average family the promised big income boost that was to be spent with small businesses.
Individuals and families are saddled with enormous and growing college debt that takes money out of our local economies, money that could be spent for small business goods and services.
Health care costs, especially for drugs, are escalating. Not only is this reducing other discretionary spending but is also putting a financial strain on small business owners who typically don’t qualify for premium subsidies to purchase insurance through the Affordable Care Act’s insurance marketplaces.
Our nation can solve these economic problems if we have the will.
But we need to do it very soon.
Frank Knapp, Jr. is the Co-chair of Businesses for Responsible Tax Reform and the President & CEO of the South Carolina Small Business Chamber of Commerce.
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