Stephen L. Rummler: Creation of jobs
November 9, 2008
Where do jobs come from? We have heard that jobs are created by tax breaks for small businesses. In my experience, as the owner and president of several small businesses, I have never hired anyone because I had more money. The reason I hired new employees was because I had more work that needed doing. More specifically, there was increased demand for the service I could provide. Or, as in my most recent small business, demand increased for the product I produced. By hiring workers, I could increase the amount of money my small businesses made.
It would be stupid for me to hire people just because I got a tax break. The more intelligent thing to do with such money would be to save it for a rainy day or maybe even buy out my competitors. Often, merging two businesses allows for a reduction of the combined work force. I make no moral claims one way or another regarding buyouts, but let’s be fair about this: It rarely, if ever, will add jobs. Merging businesses almost always reduces the number of jobs. Tax breaks for small businesses are just not the way to add jobs.
Now, if a small business were to get a tax credit or something similar for increasing its work force (excluding mergers), this should add jobs.
Stephen L. Rummler
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