Like many of you, I’ve been watching, reading and listening to what’s coming from our new administration.  I’m sure that you’ve seen announcements and credit being taken for jobs from Ford, Chrysler, Walmart and others that the Trump administration, particularly Mr. Trump himself have been taking.

Some of this is hot air, and some probably are true.  At the same time, I think this administration is missing the point.

If we’re going to create mass amounts of good jobs, it’s not the big companies that are going to do it.

Let’s look at some statistics

There are about 6,000 publicly traded companies in this country. And all of them employ lots of people.  If we only focus on this group of companies, we’re missing the point.

Wilmott did announce that they would be creating 10,000 new jobs in the US.  Let’s face it, 10,000 is a nice number.  But it pales when you compare what would happen if the 300,000 businesses in this country each added 20 jobs.

I’m sure you can do the math, and this number would be 6,000,000 jobs.  For the 6,000 public companies to match this, they would each have to add 1,000 jobs each.  Since we’ve only seen a few companies announce they’re adding 1,000 or more jobs, the biggest companies are going to likely not be the major job creators the Trump administration wants.  This is especially true when you consider that companies like Macy’s, JC Penny and other retailers are shedding jobs as fast as they can.

It’s about policy, not tweets

I probably sound like a broken record.  Both political parties have given lip service to what they call small business for years.  And for years, once both sides of the aisle get into office they promptly ignore the small business community.

I’ve yet to read what we’re going to do to make it easier for the lower middle market, companies that do $5,000,000 to $100,000,000 to exist and add jobs.  You see most of these companies are organized as either Sub Chapter S Corporations or LLC’s taxed as pass-through entities.  This means that the owners of these companies pay taxes on a personal level.  Lowering personal tax rates will help, but unless we also have these pass-through entities taxed the same way C Corporations are going to be taxed, the opportunity for adding jobs is missed.

Frankly, the large corporations already are paying very low effective rates.  When you go through the list of public companies, you see very few of them pay more than 20% of their profits in taxes, if that.  Now, let’s take a look at privately held companies.  Many of these companies if not most, pay a tax rate, that’s around 40% between Federal and State taxes.  If this administration pays attention to this and lowers the tax rate to what their big brothers are paying now, we’ll likely see millions of jobs added.

Loyalty is not rewarded with big companies

From what I’ve read about job gains versus losses, it appears that we’re negative over the past few weeks.  And, many of these big companies just get rid of employees as if they’re just an appendage that can be dropped at will.

It certainly is their right to do so, and they also have to realize there are consequences when this behavior is enacted. There’s a reason we have low employee loyalty at big companies, and I bet you know what that reason is.

Now, let’s look at smaller companies.  I can tell you from personal experience these companies do everything they can to keep their employees working.  Laying off people is an agonizing affair.  Most owners I know are very concerned about their local reputation.  They just aren’t going to lay people off unless there are no other options.  I know that was true with me and I know it’s true with the clients I work with.

The point I’m making here is that if we’re going to build good jobs in this country, it’s the smaller businesses that will do most of the heavy lifting.  Please, Mr. Trump and by the time you read this, President Trump pays attention to the lower middle market businesses.  This is where the jobs are going to come from, and this is where we need policies that support these businesses.

The biggest help would be a change in tax policy.  The next would be to think about regulations in a two-tiered manner. Expecting small companies to have the same regulatory compliance as big companies is often counter productive.  The reason regulation is put in place is because of bad behavior.  If you look at bad corporate behavior, it’s much rarer for small companies than the giants.

I certainly don’t want dangerous products, and I want clean water and air.  I’m not talking about those types of regulations.  We need a Small Business Administration that does more than guarantee loans for big banks. We need to SBA to start looking at what creates jobs.

So, President Trump, I hope you start paying attention to policy that will create jobs not individual cases.

Josh Patrick

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Topics: taxes, politcs, regulation, Uncategorized

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