Friday, January 8, 2016

Walker's corporate welfare to biggest donors ignores the real job creators, sole proprietors and small businesses.

The Republicans have big problem; owing their political careers to big monied interests.

Besides consumer demand, the real job creators can't afford Scott Walker's or the GOP's attention, like sole proprietors or very small business with only a few employees.

And that's why Scott Walker and his band of plundering Republican pirates are last in business startups and a disaster at job creation. It's all about politics and ideology:
Economist Joe Stiglitz points out "a deficiency of aggregate demand, brought on by a combination of growing inequality and a mindless wave of fiscal austerity."

He says the only cure is an increase in aggregate demand, far-reaching redistribution of income and deep reform of our financial system. The obstacles to this cure, he writes, "are not rooted in economics, but in politics and ideology."
Despite Democratic efforts to focus on small business startups, no one ever took them seriously.

But a new study backs up their efforts, and highlights how everything the GOP and Walker's WEDC have done in the last 5 years is wrong. Cap Times:
UW study: Startups driving job growth, but policies favor big business: A couple of University of Wisconsin-Extension economics researchers have a message for the state: It’s the startups, stupid.

Tessa Conroy and Steven Deller recently completed a study showing that Wisconsin job growth is fueled by newer, smaller businesses. But the report says state policies tend to boost larger, more established businesses. “Given the importance of new startups to job creation, the relatively low ranking for Wisconsin helps us better understand why Wisconsin’s recovery from the Great Recession has been one of the slowest in the U.S.,” the authors write.

That might help explain why job growth in Wisconsin lags ... 7.6 percent for the state versus 11.2 percent for the U.S. over the past five years.

In Wisconsin, policymakers often blame dismal job numbers on slowdowns in the manufacturing sector or the decline of the paper industry. Their findings showed that newer, smaller businesses rule. And without new startups, according to the study, Wisconsin would be “experiencing a significant job loss” ... nearly 50 percent of job creation in Wisconsin is done by businesses between 0 and 5 years old, about half of them from businesses less than a year old, and which have few employees.
To the chagrin of Republicans, these small businesses can't afford to stuff their campaign coffers.
And the performance by Wisconsin startups is fairly lackluster compared to the rest of the country. For jobs created from newly birthed startups in 2012 — the most recent year for which data was available — Wisconsin ranked 47th among the lower 48 states.

“In Wisconsin, and across the nation, new business startups are key to job creation ... Equally important is the survival rate of those new startups. The question is: Can Wisconsin craft policies that encourage new business startups and support them in the key first three to five years of operation?”

There are jobs, and there are potential jobs. The latter often come in the form of the state’s non-employer businesses, which have increased in number by 25 percent since 2000, accounting for 71 percent of total businesses in 2013. These businesses, the smallest businesses in the state, are concentrated in non-farm agriculture, fishing, hunting, real estate, the arts and entertainment. They don't have employees, but they generate economic activity, and if they grow can lead to hiring employees. But again, according to the report, Wisconsin lags both the U.S. and neighboring states in the creation of non-employer businesses.
And from all indication, Madison is strong on startups:
In the Madison area ... jobs created from new startups increased from 10 percent of the state total to 12 percent from 1977 to 2013. “This growing importance of ‘entrepreneurship’ is something that economists have known about for years, but policies still tend to favor larger established (older) businesses.”

He points to Wisconsin Economic Development Corp. policies that favor larger manufacturing firms over smaller startups ... a WEDC webpage touting the agency's successes ... heavy on large corporations or multinationals like papermaker Pratt Industries, global manufacturer Gardner Denver and Ireland-based Kerry Ingredients. WEDC also focuses on luring existing businesses to the state, which in reality rarely happens. “Very few companies really move around that much,” he said. “The vast majority of startups are located in the community that the owner lives in.”

So why doesn’t the state put its money where the jobs are? Deller, who’s not been shy about criticizing state economic policies in the past, has a theory. “In today’s increasing pressure to raise money, politicians are drawn toward those larger, established firms because they have the resources to make significant contributions. Smaller startup firms are not in a position to be proactive in terms of significant donations.”

Add to that the fact that startups don’t lobby. “Politicians are looking to be associated for business activity that draws media attention.”
So what can be done? Well, you can bet Scott Walker won't learn from any of this:
To counter these factors, Conroy and Deller recommend a multi-pronged approach to encouraging new business ventures, including educational opportunities from the state universities and technical colleges to local efforts by chambers of commerce and business associations to match entrepreneurs with workshops and mentors. They also suggest boosting financial support on the state level through loan guarantees and other programs.

“Support for new business owners, even those that do not yet have employees, could lead to higher gross and net job creation.

No comments: