08/11/2014 09:18 am ET Updated Oct 11, 2014

The Unique Burdens of Small Business

Two years ago President Obama uttered ill-considered words that alienated a major segment of the business community -- small firms. He was trying to make a valid point about how everyone in our society benefits from government programs, but it came out as a slap in the face of small business. "If you've got a business, you didn't build that," he said.

I do not personally know any small business executives who would deny that they benefit from government programs nor that they depend on the entire gamut of publicly funded institutions that make modern society possible -- such as roads, schools and national security. But they also invest intense energy, put in long hours and take great personal risks to build their businesses, often from the ground up. Those who have forged successful firms are proud of what they have accomplished -- they believe with justification that they did indeed build their companies -- and they were offended by the President's comment.

The president apparently was lashing out at corporate CEOs and their generous compensation packages, which is fair enough. "Feel free to keep your house in the Hamptons and your corporate jet," he said. "I'm not concerned about how you're living. I am concerned about making sure that we have a system in which the ordinary person who is working hard and is being responsible can get ahead."

But the vast majority of small business owners do not have mansions or private jets. They are in fact those very "ordinary" people working hard and being responsible to which the President referred. They are ordinary people pursuing dreams who have mortgaged everything they own to launch their enterprises and are struggling to keep their heads above water in a tough economy. Small firms especially are vulnerable to the Gordian knot of regulations they must contend with, including the complexities and cost of Obamacare. Significant hikes in the minimum wage, as promoted by President Obama, can imperil the survival of many small firms.

Most large corporations can cope with the regulatory burden because they have lawyers, safety engineers, environmental scientists and other professionals to attend to such things. But smaller companies lack such resources and are often hamstrung, especially when the rules of different agencies conflict or overlap with local and state rules, and they have nowhere to turn to get their problems resolved. The deck is stacked against them and as a result we are seeing a steady decline of new business startups which historically are a major source of new jobs.

This unfortunate trend poses a major threat to our economic future. The vast majority of businesses are small and they provide more than half the jobs in our economy. Small businesses are often the incubator where new concepts and products are first introduced to the public. If there were ever a time when small business needed a friend in the White House, it is now.


Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. You may quote from this with attribution. Let me know if you would like to speak with Jerry. August 2014