W. Edwards Deming said, “God can have opinions; everyone else should bring data.”
I opened my MBJ Bulletin e-mail last week and read the column from Amy McCullough entitled “Why Businesses Are Not Expanding.” The second sentence states unequivocally, “Regulatory uncertainty is the reason many businesses are afraid to expand.” Really? Then I search the article for the irrefutable evidence. There is none. There is only anecdotal evidence, as several business people point to health care reform, financial reform, E-verify, and uncertainty about taxes as reasons for holding back on hiring.
There is actually a table of data on nonfarm employment in the middle of the article, but this is largely ignored by the writer, except in one instance. McCullough points to an increase in jobs in the Professional and Business Service category from the end of 2010 until May, 2011. She claims this is due to increased regulation on businesses. Let me get this straight. We’re not adding jobs because of regulatory uncertainty, but jobs dealing with regulatory issues are increasing dramatically. Isn’t that a contradiction?
So, I went back to the data, the table in the middle of the article. Do you know that we have ADDED 8,000 jobs in Mississippi since the beginning of the year? Of the 11 categories listed, 5 have seen declines so far this year. Two categories have been hit the hardest. Education and health services saw a decline of 2,200 jobs for the year, and government saw a whopping decline of 4,900 jobs this year. So, are these categories struggling with regulatory uncertainty? And even with these losses of 7,100 jobs, we still have a net gain of 8,000!
The reality is that 22.3 percent of the jobs in Mississippi come from government. That’s almost one in four. If we’re putting our public school teachers in the education category, that number is even higher. The other reality is that 51 percent of businesses in Mississippi employ four or fewer people. Half the businesses in the state won’t even have to worry about the health care regulations. In fact, they will probably benefit from private exchanges that allow them to offer benefits to their employees. Those small businesses may experience uncertainty because of financial reform as they struggle to find capital to run their shops, but they’re not banks. And E-verify? Well, if you’re hiring illegals, you’ve got other problems.
So, why aren’t businesses expanding? I’d like to offer some of my own anecdotal evidence. Note I have no data to back this up. This is only my personal observation.
I think businesses are not expanding because they are uncertain about their customers. If your sales haven’t rebounded, you’re not going to hire more people. If your sales have come back, but you’re not sure they’re here to stay, you’ll make do with the folks you have. As a small business owner, I know that hiring a new employee is a leap of faith. I am trusting that this new person will help me grow my business and pay for himself. Anything that causes me to doubt that will cause me to sit on my hands.
But that’s just my opinion, and I’m sure you’re asking, “So where’s your data?”