May 17, 2022
The monthly employment numbers from the U.S. Bureau of Labor Statistics (BLS) are eagerly awaited in many quarters. These first-Friday stats are viewed as a bellwether of overall economic strength and the private sector’s job creation prowess. But the data reported by the media and Biden administration are just the surface. What do the numbers beneath tell us about the real state of our economy and employment?
Let’s consider the unemployment data from February of this year. In a statement released in mid-March, the Biden administration touted the 678,000 new jobs created in the previous month, saying that its economic policies were working to grow the economy “from the bottom up and the middle out.” Just after that, the Washington, D.C.-based S-Corp Association released an interesting analysis, this one done by ADP. (I read the S-Corp Association’s newsletters from time to time because this group exists to promote and protect the interests of America’s 5 million S corporations, many of which are AICC member companies.)
ADP’s study is instructive because the BLS numbers report employment figures only by industry; ADP’s look at company size. According to the ADP breakdown, while private-sector employment increased by 475,000 net jobs, employment at small businesses—those with between one and 49 employees—decreased by 96,000, with the vast majority of those losses occurring at companies with fewer than 20 employees. The bulk of the job creation, it appears, is happening at public companies with more than 1,000 employees. The S-Corp Association concludes from this that we are thus witnessing an “ongoing consolidation of economic power away from Main Street and into the hands of the largest publicly traded companies.”
The public policy implications of this are important to all of us who own small businesses. As I have mentioned in previous columns, the tax and spending legislation that we have seen introduced on Capitol Hill are tilted against small businesses, particularly pass-throughs. The House-passed Build Back Better Act, which I addressed in the March/April issue of BoxScore, would potentially mean upward of a 20.4% difference in the tax rates for C-corps and S-corps, with the Cs having the advantage. Fortunately, cooler heads have prevailed in the Senate, just as our Founding Fathers designed, but even that chamber is fragile in its ability to rationally reason.
This brings me to my second point—Congress. I read recently—this is being written in early April—that a new Gallup Poll shows that 76% of Americans disapprove of the job the current Congress is doing. Since AICC is a nonpartisan organization, I won’t mention the party in control. Suffice it to say, however, I imagine that most small business owners, seeing what is happening in their shops and in their plants, are in agreement with the poll’s majority. Let us then hope that another set of employment numbers—those on Capitol Hill—might also dramatically change in the months ahead.
Eric Elgin is owner of Oklahoma Interpak and Chair of AICC’s Government Affairs subcommittee. He can be reached at 918-687-1681 or eric@okinterpak.com.
