I recently heard someone say that a true American does not want a free ride, he wants to sail his own boat. I find that statement to be overwhelmingly true, but how much sailing can one do when obstacles fill the waters?
The business environment in America has become flooded with obstacles. I regularly hear employers bemoan the fact that they're spending an increasing amount of time dealing with regulatory issues, leaving less time available for growing their business.
For example, at a recent employment law training, Patricia Latham Ball, an employment law attorney and owner of Management Northwest in Boise, Idaho, stated that the Federal Government has just sent out a bevy of newly hired labor law inspectors. According to Ball, even minor corrections on time cards are triggering audits going back three years.
According to Ball, the inspectors' issuing of fines over small details forces business owners to spend more of their time addressing compliance issues, leaving less time available for growing their business.
Changes in health care laws are also creating regulatory obstacles. As one employer told me, "I'm giving this issue continual attention because the government keeps updating their 'interim final rules.'"
I first learned about the government's "interim final rules" term at a recent health care forum hosted by the Idaho Department of Labor. At this forum, professionals from three different specialties in health care gave their understanding of how new health care laws affect employers. Know that the audience as well as the presenters could only laugh at the term.
The people I'm talking to are not alone. After submitting an op-ed piece on this matter to my local business paper, I saw an article in the Wall Street Journal, entitled Few Businesses Sprout, With Even Fewer Jobs, by Justin Lahart and Mark Whitehouse.
In that article, the owner of a Midwest produce company is quoted as saying "I can't determine what the cost of providing health care for employees would be," and further states that starting a company these days "is harder than it was at any time I can remember."
The crux of all this is that government regulations have become overwhelming. One person recently highlighted this fact by telling me, "Why would I start a business when I know I will be required by government regulations to spend 25 percent or more of my efforts on compliance?"
But let's set aside compliance issues for a minute and consider America's growing struggle in the world economy. According to numbers derived from the Department of Labor, the US has lost 42,000 factories in the past 10 years. Additionally, the US trade deficit is now running between $40 and $50 billion per month.
In response to these and other financial trends, some cry out for protectionism. I sympathize with their general frustration; my business is down, too. But global business has always existed, and if we institute protectionist measures we'll end up looking like Cuba. It's a hard pill to swallow, but yes, Americans must now compete with much lower-paid workers.
This, by itself, is not an insurmountable problem. Americans can find ways to compete. After all, we are known for our ingenuity in getting past obstacles.
But as any business owner will tell you, access to working capital is often a necessary ingredient for getting around obstacles and achieving growth. Unfortunately, the WSJ tells us that venture capital firms are investing 27 percent less than they did two years ago. And, with housing prices down, entrepreneurs aren't able to borrow on their (reduced or non-existent) home equity. The result? Companies aren't hiring new people because they simply can't afford it.
Slogging through the deep swamp of regulations and compliance issues makes growth efforts difficult enough. But contrary to the thinking of the current administration along with Federal Reserve Chairman Ben Bernanke, Quantitative Easing is not the only option to jump start the economy. Safer, better options exist.
I acknowledge that current laws won't go away, but one thing the government can do to boost the economy is put a year-long moratorium on establishing new regulations. Second, the government can suspend for one year the employer's side of payroll taxes for all new hires.
Some may argue that governmental budgets can't afford this, but look what's happening right now: Government is paying out unemployment benefits while collecting nothing from people out of work. A year-long employer-side tax break on all new hires would stimulate hiring (ripple effect: unemployment payouts diminish), and the newly hired would pay their taxes as usual. Plus, with new hires spending their paychecks, they would be contributing to sales tax revenues. Now before people start throwing political stones, I need to add that these ideas have seen support from both sides of the political aisle.
So let's ask for action. If we want to boost our economy, can't we open up the waters with a one-year moratorium on both new regulations and the employer-side of taxes for new hires? No existing business regulations will go away, but no ones will be created either. One year. That ought to be enough to restart the economy.