All hail the Job Creator! This noble American creature puts bread on the table of his fellow citizens and lifts lesser mortals out of poverty every time he pulls out a credit card.
Job creators used to go about their business without much fuss, but lately they've been getting a lot of attention from Washington, D.C. Republican House Speaker John Boehner routinely extols JCs and frets that congressional dysfunction over on-and-off tax cuts, threatened spending cuts, and the bloated national debt may cause them "confusion" and "uncertainty." The Senate Republican leader, Mitch McConnell, worries that Washington may actually punish this fine but delicate species. For people who aren't sure how to recognize a job creator, GOP presidential hopeful Mitt Romney has been running ads claiming that he is one—or was, anyway, when he last worked in the private sector more than a decade ago.
Most politicians speaking on behalf of JCs aren't JCs themselves, however, and they tend to miss a point or two when characterizing the interests on these vaunted beings. So here's some elaboration on job creators, who they are, and what they, themselves, actually say they want.
First, politicians often describe job creators as small business owners who run delis, dry cleaners, nail salons, and other types of community shops. That's a bit misleading. Small businesses do create some jobs, but they also fail at a high rate, which obviously kills jobs. On the whole, businesses with fewer than 50 employees have barely created any new jobs over the last year, and they're responsible for about 38 percent of the 6.5 million jobs lost since 2007. Of course, job-creator defenders might argue that Washington policies have prevented small businesses from creating new jobs. But small businesses typically suffer from a lot of churn, even when the economy is strong.
Big businesses employ about 40 percent of all Americans, but their job-creation record is mixed. They've added about 900,000 jobs over the last year, for instance, yet still employ about 1.7 million fewer people than before the recession.
The biggest job creators are medium-sized businesses with between 250 and 1,000 workers. Firms of this size have typically survived the startup phase, and they tend to grow quickly. Over the last year, such firms have grown at the fastest pace and added about 625,000 workers.
Virtually every business wants lower taxes and less regulation, which are top items on the GOP agenda. But there other things job creators want even more, such as:
More customers with more money to spend. In the latest monthly survey by the National Federation of Independent Businesses, a prominent Washington trade group, 25 percent of business owners said their single biggest problem was poor sales. (Taxes and over-regulation were tied for second place, with 19 percent each.) Poor sales are due to the overall weak economy, so it makes sense that businesses in general would favor an extension of tax cuts and federal unemployment benefits, along with any other type of stimulus measure that might boost spending. Mainly, they just need the economy to be stronger.
Political leaders who act like job creators. Many business leaders see the political circus in Washington as a farcical embarrassment that does more harm to the economy than good. They also frequently point out that any business run with the sort of vapid posturing, gamesmanship, and incoherent decision-making that dominates Congress would promptly flop.
Starbucks CEO Howard Schultz, whom Fortune named its 2011 Businessperson of the Year, is so disgusted with Washington's ineptitude that he has rallied at least 140 fellow CEOs to stop making political contributions to either party, as a way to protest poor leadership on the economy. Schultz began his crusade after the debt-ceiling fiasco last summer, which needlessly raised the prospect that America might default on its obligations and led to the first-ever downgrade of the U.S. credit rating. The situation in Washington has only gotten worse since then, with the total failure of a "super committee" charged with cutting the debt and the usual last-minute brinksmanship on other important economic measures. Schultz, whose company employs about 107,000 people in the United States, feels that Washington has caused a "profound crisis of confidence in America." Ordinary Americans seem to agree. Polls by Gallup show Congress's approval rating at just 11 percent, the lowest level since Gallup being doing the survey in 1974.
Real predictability from Washington. Boehner has argued that the recent flap over whether a payroll tax cut should be extended for two months, or 12, hurts businesses because it creates an unpredictable business climate. He might want to take a longer view. What businesses are really focused on is a set of major decisions that Congress must make over the next 15 months or so, with a high risk that botched policymaking could substantially harm the economy.
The biggest looming issue is the Bush-era tax cuts, which are due to expire on Dec. 31, 2012. If the do-nothing Congress does nothing, most Americans will face a big tax hike in 2013, which would probably torpedo consumer spending, since few people are prepared for sharply higher taxes. Across-the-board spending cuts go into effect beginning in 2013, due to the super committee's failure to come up with a more targeted and effective way to address the $15 trillion national debt. Then in early 2013, the U.S. borrowing limit will have to be increased once again, with the possibility of another fight to the death over fiscal policy.
If Boehner and his allies cared about predictability, they'd make these decisions soon so that businesses know what's coming, and can plan accordingly. But like every other contentious matter in Washington these days, it's likely that those decisions will be last-minute nail-biters that Congress won't address until after the November elections. "It's up to a lame-duck Congress to make some of most important decisions in business history," says Ethan Harris, head of North American economics for Bank of America Merrill Lynch. "If I'm running a business, what do I do next summer? I wait. Divided government doesn't work, because both parties are acting like four-year-olds." We may still have divided government after the elections, of course, which is one reason real job creators have extraordinarily low confidence in Washington.
An active Federal Reserve. It's popular to bash the Fed—but not among business leaders. CEOs realize that the Fed is the only outfit in Washington capable of making sensible moves to help the economy. The Fed's "quantitative easing" programs have been controversial among the general public, but they've helped boost stock prices and keep many companies above water. The Fed's low interest rate policy has drawn boos from savers, but it has helped corporations raise record amounts of cash, which will carry them through the next crisis, if there is one—or finance hiring and investment, if the economy genuinely improves. And while an unstated weak dollar policy may enrage Ron Paul and his libertarian acolytes, it has helped boost U.S. exports and even draw some overseas firms to the United States. The Fed's activist policies may have long-term consequences that still aren't clear, but many business leaders feel the Fed has prevented a full-blown wipeout that would have put many job creators out of business.
Better tax and regulatory policy. Many businesses would love to see a simpler tax code with lower rates, fewer deductions, and less need for high-priced attorneys and accountants. They'd also like to see fewer silly government rules and better coordination among the overlapping agencies, at all levels of government, that regulate business. President Obama is culpable on this complaint, since his administration has passed many new regulations while repealing or updating few old ones. And while many experts agree on the need for tax reform, Obama hasn't laid out a plan of his own.
But Republicans haven't been helpful either. Many of them have been howling for the complete repeal of Obama's healthcare reforms, the Dodd-Frank financial reforms that addressed many of the abuses that led to the 2008 financial meltdown, and even the Sarbanes-Oxley rules that President Bush signed in 2002. Some businesses might in fact be better off if they were totally freed of all regulations. But those reforms, imperfect as they may be, were passed to address problems that harmed job creators along with many other Americans. What would really help job creators is a set of tax and regulatory reforms that has bipartisan support and won't be the target of repeal in a few years. Then businesspeople could focus on business instead of the endless inanities of politics.