Taking Charge

Should government help entrepreneurs create jobs, or just get out of their way?
Magazine Contributor
4 min read

This story appears in the June 2004 issue of Entrepreneur. Subscribe »

Over the past year, the has surged ahead, posting some of its strongest growth rates in years. Most recently, Federal Reserve Chairman Alan Greenspan has cited a gradually improving labor market. Indeed, the "jobless recovery" has become a hot issue in the presidential campaign and a cause of worry for owners and staff alike. Now some in have begun to ask how can stimulate a hiring boom.

Congresswoman Nydia Velázquez and Congressman Rick Renzi see drastically different ways in which Congress can help. Velázquez (D-NY) is the ranking minority member on the House Committee; Renzi (R-AZ) founded three small businesses before entering Congress and takes a major interest in entrepreneurs' issues. The two don't agree on much politically. But they share one characteristic: They both care about small business, and they don't back away from hot issues relevant to entrepreneurs.

What do you think the government should do to help entrepreneurs increase job creation?
Rep. Rick Renzi: The role of the government is to get out of the way of the American entrepreneur. When I was in business, there was a take-off period [a period of time before an entrepreneur knows if the business will succeed] of three to four years. Now, that'd be five years. [Government] is making it harder for the American entrepreneurial spirit to prosper. We need to finalize some of the tax cuts [passed by the House in the past two years] and simplify the tax code.
Rep. Nydia Velázquez: The government has to provide our nation's small businesses with targeted tax relief, but it also has to create an environment in which these firms can thrive. That means investing in initiatives that cultivate -the SBA's Small Business Development Centers and Women's Business Centers, which give business owners the tools to launch their companies, grow them and create jobs.

Specifically, do you think the should establish hiring incentive programs to help promote job creation among small and midsize enterprises?
Velázquez: Not only should the government establish hiring programs to promote job creation in small firms, but it should also embrace programs that encourage individuals to own businesses. For example, rather than focusing on moving individuals from welfare to work, we should move them from welfare to owning a business or give those who have mastered a trade the skills to start and run a business. Small businesses are the training ground for the American work force, providing almost 70 percent of workers with their first job and initial on-the-job training.
Renzi: The government can do a better job with work force development than with hiring incentives. In a small business, you grow naturally [in reaction to the economy]; and if government comes in and says 'OK, we'll give you a tax break if you hire certain people,' it's putting the cart before the horse. That's my instinct as a businessman. Helping with training and expertise, SBA workshops-that stuff I love. Saying to me 'We'll give you a $1,000 tax cut if you hire more than six people'-I [prefer to make hiring decisions] based on my business, not on the government.

Should the federal government play any role in limiting trade to promote job creation in the United States?
Renzi: We are seeing a resurgence in concern about job loss in some sectors, like manufacturing, textiles, commodities-losses due partly to trade competition. But that [job loss] is also due to regulation. The tax code has become so burdensome that you have to hire so many professionals to take care of your taxes. I had three professionals to help me with my taxes when I was a small-business owner.
Velázquez: One of the most burdensome areas is complying with IRS regulations. Small-business owners often find themselves buried under a mountain of paperwork when they could be helping customers, filling orders and expanding their companies.

Still, the federal government has a role in promoting fair trade agreements, recognizing the costs and benefits of trade and the effect it can have on our nation's labor force and competitiveness. A component of this is making sure small businesses have a seat at the negotiating table so their needs are taken into account when hammering out these deals. Small-business considerations are just afterthoughts-if they are given any thought at all-in the trade policies being pursued under the Bush administration.

Joshua Kurlantzick is a writer in Washington, DC.


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