Weekend Economists Waiting for FDR July 13-15, 2012

[Demeter]

20. Picking On the Job Creators

http://www.ritholtz.com/blog/2012/07/picking-on-the-job-creators/

Cue the world’s smallest violin (again, I guess) for the country’s “job creators.”

So BR emails me the other day that links here with the message “Have a field day with this crap” (not unlike many emails I get). So, off to the link I go to read the story. What I assume incensed the sender is essentially the same thing that has really been incensing me for the past several years: that we apparently now live in a relatively fact-free environment where folks are comfortable spinning whatever tales fit their agenda, reality be damned. This seems to be especially true when it comes to genuflecting before our deified “job creators.”

Let’s look at the crux of the author’s piece (emphasis mine):

However hostile Democrats like me may be to the excesses of Wall Street, and however much everybody admires the small, independent businesses in our neighborhoods and communities, big business remains the primary driver of economic growth and job creation.

Really?

What does ADP data tell us about that going back to the end of the recession?



What does the SBA tell us (PDF) about small business (emphasis mine)?

Small firms (defined as those with fewer than 500 employees):
• Represent 99.7 percent of all employer firms.
• Employ about half of all private sector employees.
• Pay 43 percent of total U.S. private payroll.
• Have generated 65 percent of net new jobs over the past 17 years.
• Create more than half of the nonfarm private GDP.

All that said, is it really appropriate to write that “big business remains the primary driver of economic growth and job creation” when the facts (remember them?) tell us otherwise?

This whole “leave the billionaire job creators alone or they won’t hire anyone” meme has gotten very old, very fast. I guess in large part because it’s untrue. And also because they’ve been left alone and they’re still laying people off...As I’ve shown repeatedly via NFIB data, how sales are faring at small business has an incredible correlation to the unemployment rate.

Anyway, it’s a sad state of affairs when virtually every piece of information put out for public consumption needs to be fact-checked. I don’t know when, exactly, this trend started, but I sure hope it gets reversed soon. Oh, and lest anyone accuse me of getting political, note first that the author is a Democrat.

Adding this Reagan quote from April 1981: “Let us not overlook the fact that the small, independent business man or woman creates more than 80 percent of all the new jobs and employs more than half of our total work force.”