Why are private businesses not hiring?

  • Posted by a hidden member.
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    Aug 22, 2011 6:44 PM GMT
    Uncertainty.

    http://www.huffingtonpost.com/brian-hamilton/dont-blame-businesses_b_907347.html

    Small business represents 64 percent of net new jobs for the past 15 years, but -- in spite of their profits and growth -- small businesses haven't been hiring lately, according to the still-elevated unemployment rate. There is too much uncertainty for employers to take on the long-term financial risk of new employees. Below are five factors contributing to the privately-held business uncertainty and its effects on unemployment:

    1) U.S. debt. Last week, debt rating agencies began to question the U.S. federal government's ability to cover interest payments. This does not mean that the rating agencies think the government will default, but they do acknowledge it is a possibility. Unless elected officials can develop a long term and credible solution (more than just raising the debt ceiling) to the nation's spending problem, then the government's bond ratings could be downgraded. What does that mean for business owners? Without a sustainable solution in place or at least on the table for negotiations, business owners cannot predict the effect that the U.S. defaulting on its payments would have on their future interest rates and borrowing capacity.

    2) Healthcare policy. The Affordable Care Act was signed into law in March 2010 and created insurance exchanges, designed to make comparison shopping easier for small businesses and help them find relevant tax credits for healthcare. But, until the exchanges are fully implemented and small business owners figure out how to navigate their framework, healthcare costs remain another big question mark for hiring.

    3) Possibility of tax hikes. Related to point #1, the possibility of tax hikes, both personal and commercial, cannot be disregarded. Like healthcare, tax increases to help alleviate the national debt could severely hinder the profitability of American businesses. Though they have been increasing slightly, the average net profit margin for private companies is only about 3.5%. Not knowing the effects the eventual tax code changes would have on this margin encourage business owners to halt other investments, like employees.

    4) Possibility of the Fed's quantitative easing. When Federal Reserve Chairman Ben S. Bernanke went before the Senate, he indicated that if the economy turns out to be weaker than expected, the Fed would consider a third round of quantitative easing, QE3. Such action is not guaranteed, only an option. But, the threat of QE3 is enough to evoke a market response. The inflation that would result from the QE3 would increase costs for small businesses and discourage consumer spending, which brings up point #5...

    5) Stalled consumer spending. For both April and May, 2011, real personal consumption expenditure (real PCE), which takes prices changes into account, decreased .1 percent. Like the change to the Small Business Optimism Index, the small decreases are not alarming. It is more likely the case that consumers are likewise spending cautiously until they know what will happen regarding the three previous points.

    While Washington is actively attempting to give reason for business owners to celebrate and solve these unknowns, both parties are presently contributing to the uncertainty in the business operating environment and discouraging hiring. Private businesses are run by people who are not risk-averse but have costs to manage. Within the next week, as the August 2 deadline from the Treasury approaches, business owners should expect some resolution about their expected costs. When they do, they will be positioned to hire.
  • Posted by a hidden member.
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    Aug 22, 2011 6:45 PM GMT
    "Uncertainty" = excuses in the face of lackluster consumer demand.
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    Aug 22, 2011 6:53 PM GMT
    For the first time since I started at this job, I received word last week that the new guy I interviewed (and subsequently recommended for work) is not going to be hired. Less work for me since I don't have to train him, but definitely not a good economical sign.
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    Aug 22, 2011 6:57 PM GMT
    Christian73 said"Uncertainty" = excuses in the face of lackluster consumer demand.


    It must be nice to be completely detached from market realities and benefit off the productivity of others.
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    Aug 22, 2011 7:06 PM GMT
    riddler78 said
    Christian73 said"Uncertainty" = excuses in the face of lackluster consumer demand.


    It must be nice to be completely detached from market realities and benefit off the productivity of others.


    Riddler, what is your current participation in "market realities"?
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    Aug 22, 2011 7:25 PM GMT
    PresentMind said
    riddler78 said
    Christian73 said"Uncertainty" = excuses in the face of lackluster consumer demand.


    It must be nice to be completely detached from market realities and benefit off the productivity of others.


    Riddler, what is your current participation in "market realities"?


    I run a business and am in the process of starting two others with employees in Asia and North America.
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    Aug 22, 2011 8:06 PM GMT
    riddler78 said
    Christian73 said"Uncertainty" = excuses in the face of lackluster consumer demand.


    It must be nice to be completely detached from market realities and benefit off the productivity of others.


    I'm sure it is nice for those businesses, like banks, pharma companies, and the health insurance industry that never seem effected the "free market" and never redound their good fortune to their costumers or employees.
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    Aug 22, 2011 8:23 PM GMT
    OPWithin the next week, as the August 2 deadline from the Treasury approaches, business owners should expect some resolution about their expected costs. When they do, they will be positioned to hire.


    LOL
  • Posted by a hidden member.
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    Aug 22, 2011 8:59 PM GMT
    CEOs and small business owners have been repeatedly interviewed and the general consensus is uncertainty, especially the cost of doing business as a result of regulatory uncertainty.
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    Aug 23, 2011 12:48 AM GMT
    socalfitness saidCEOs and small business owners have been repeatedly interviewed and the general consensus is uncertainty, especially the cost of doing business as a result of regulatory uncertainty.


    And if I were sitting on trillions in profits and hiking my own pay rather than hire anyone, that's the excuse I'd use too. It sounds good but is essentially meaningless and the real reason, lack of consumer demand from middle and working class people might make them need to explain why they don't help resolve the actual cause of not hiring (greed) by hiring people.
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    Aug 23, 2011 12:58 AM GMT
    Christian73 said
    socalfitness saidCEOs and small business owners have been repeatedly interviewed and the general consensus is uncertainty, especially the cost of doing business as a result of regulatory uncertainty.


    And if I were sitting on trillions in profits and hiking my own pay rather than hire anyone, that's the excuse I'd use too. It sounds good but is essentially meaningless and the real reason, lack of consumer demand from middle and working class people might make them need to explain why they don't help resolve the actual cause of not hiring (greed) by hiring people.

    Yeah, all the CEOs and small business owners got together and decided to say the same thing. Consumer demand is soft, or course, in this economy, but there could be more hiring if the federal govt were not on an anti-business war via EPA and NLRB, among others. At the rate this govt is going, business will hire, but in China, and jobs will be permanently lost.
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    Aug 23, 2011 1:45 AM GMT
    socalfitness said
    Christian73 said
    socalfitness saidCEOs and small business owners have been repeatedly interviewed and the general consensus is uncertainty, especially the cost of doing business as a result of regulatory uncertainty.


    And if I were sitting on trillions in profits and hiking my own pay rather than hire anyone, that's the excuse I'd use too. It sounds good but is essentially meaningless and the real reason, lack of consumer demand from middle and working class people might make them need to explain why they don't help resolve the actual cause of not hiring (greed) by hiring people.

    Yeah, all the CEOs and small business owners got together and decided to say the same thing. Consumer demand is soft, or course, in this economy, but there could be more hiring if the federal govt were not on an anti-business war via EPA and NLRB, among others. At the rate this govt is going, business will hire, but in China, and jobs will be permanently lost.


    The Chamber of Commerce talking points certainly reached you. icon_lol.gif

    If you ask any small business owner whey they're not hiring, they will tell you it's a lack of demand. If you ask why businesses are shutting down, they will tell you that they've lost customers.

    Nothing the EPA or the NLRB has done or will do is going to impact decisions to hire as much as whether or not there's enough business (e.g. paying customers) to warrant expansion.

    Believing otherwise is having drank the Kool-Aid.
  • TheIStrat

    Posts: 777

    Aug 23, 2011 2:18 AM GMT
    Because Europe is fucked and about to infect America
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    Aug 23, 2011 2:21 AM GMT
    Christian73 saidThe Chamber of Commerce talking points certainly reached you. icon_lol.gif

    If you ask any small business owner whey they're not hiring, they will tell you it's a lack of demand. If you ask why businesses are shutting down, they will tell you that they've lost customers.

    Nothing the EPA or the NLRB has done or will do is going to impact decisions to hire as much as whether or not there's enough business (e.g. paying customers) to warrant expansion.

    Believing otherwise is having drank the Kool-Aid.

    Lack of demand resulting from the economy is a factor, but there are several other factors as reported: economic contraction, Obama, and healthcare. As the July 2011 report indicates, they are hiring, but overseas. Now let's see who is drinking the Kool-Aid.

    http://www.businessinsider.com/small-business-ceos-reveal-why-theyre-not-hiring-economic-contraction-obama-and-healthcare-2010-8

    http://www.businessinsider.com/heres-why-small-business-isnt-hiring-and-wont-be-hiring-2011-7
  • conservativej...

    Posts: 2465

    Aug 23, 2011 2:31 AM GMT
    riddler78 said
    Christian73 said"Uncertainty" = excuses in the face of lackluster consumer demand.


    It must be nice to be completely detached from market realities and benefit off the productivity of others.


    I think Christian is one of those persons you could say "who dials for dollars." So yes, he lives off of largess.
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    Aug 23, 2011 2:12 PM GMT
    riddler78 said
    PresentMind said
    riddler78 said
    Christian73 said"Uncertainty" = excuses in the face of lackluster consumer demand.


    It must be nice to be completely detached from market realities and benefit off the productivity of others.


    Riddler, what is your current participation in "market realities"?


    I run a business and am in the process of starting two others with employees in Asia and North America.


    Riddler, HONESTLY???

    You can disparage Christian as being "completely detached from market realities".....

    while you claim to "run a business and in the process of starting two others with employees in Asian and North America."

    Your claim certainly adds to your credibility relating to "market realities" IF TRUE.

    IF TRUE you are a superman of business....able to administer a business and create 2 others--Internationally No Less---- all while being the busiest poster on RJ.
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    Aug 23, 2011 2:18 PM GMT
    PresentMind said
    riddler78 said
    PresentMind said
    riddler78 said
    Christian73 said"Uncertainty" = excuses in the face of lackluster consumer demand.


    It must be nice to be completely detached from market realities and benefit off the productivity of others.


    Riddler, what is your current participation in "market realities"?


    I run a business and am in the process of starting two others with employees in Asia and North America.


    Riddler, HONESTLY???

    You can disparage Christian as being "completely detached from market realities".....

    while you claim to "run a business and in the process of starting two others with employees in Asian and North America."

    Your claim certainly adds to your credibility relating to "market realities" IF TRUE.

    IF TRUE you are a superman of business....able to administer a business and create 2 others--Internationally No Less---- all while being the busiest poster on RJ.


    Yes, honestly - I don't have that many employees - but that's also why one has employees - so you don't do everything yourself. There are multiple people on RJ who can attest that this is in fact true (in fact I have flatmates who are active members on RJ and who I met through RJ). I don't claim that each of the businesses are successful (yet) - and in fact the startups have been consuming more cash than they output. But I don't care what you think or what you believe it's always been irrelevant to the points I've made - it is however relevant in the case of Christian because of what he has claimed of himself has been part of his arguments.

    Btw - I think you'll find that I am in fact not the busiest poster on RJ - far from it just given the number of posts - there are only certain times of the day I can post.