Rural-Based Businesses May offer Much-Needed Perk to Small Business Economy

By Marshall Kirby, Public Policy Analyst

Do you own a business based in the rural economy?  If you do, there have been two really great articles recently.  Whether you own/operate a farm, shop, or a service related to business in small towns across the country, you have probably recognized that you are the driver of economic growth and employment for your town or county.

This article details some trends and forecasts to expect in the coming months of 2011.  A couple key points from the article include the following. Farmers’ roles in society are quickly changing.  People are becoming more interested in knowing where their produce and meat is coming from and are paying attention to how it is grown/raised.  This can pay dividends for farmers seeking to connect to more customers and new supply chains.  Additionally, there has also been more attention paid to local businesses in rural areas, which can lead to growth and expansion opportunities.  On a related note, with tourist projections for 2011 being very promising, operators of businesses in small towns should pay more attention to attracting out of town visitors.  Additionally, the article mentions that this means that rural businesses need to begin to spend more time using social networking and other forms of advertising as small towns are catching up on the use of Google and other review sites to find and review businesses.

What else can we expect?  Well there is some troubling news ahead for businesses in rural areas.  With budget shortfalls affecting so many states, counties, and towns, individuals and business owners in rural areas may begin to feel the effects of budget cuts trickle down to them.  The article warns business owners to be aware that the budget shortfalls could mean that school consolidations and closing of post offices lay in store for many small towns.  Also, the article mentions the Health Care Reform law passed last year.  Some new things will be kicking in which will affect small businesses, including a 35% tax credit available to small businesses offering health insurance to its employees.  Very important to rural areas, there will also be an increased payment structure to rural medical centers and doctors, which will help to keep pace with increased demands for service.

Cut Spending and Eliminate 700,000 Jobs?

By Marshall Kirby, Policy Analyst

As a citizen, the debate over budget cuts and the fiscal crisis has permeated throughout the media.  The one thing all sides agree on is that something will need to be done to shore up America’s fiscal position sooner rather than later.  It seems hard to believe that a decade ago discussion of the US deficit raised little concern even from well respected “deficit hawks.”  However, over the last ten years, our country has consistently spent far more than it received in revenues.  This has led us to the point where even those analysts who believed that America’s fiscal position was strong have now raised their eyebrows with regard to our country’s long term budget sustainability and solvency.

Right now, Republicans and Democrats both acknowledge the situation and the need to produce meaningful budget cuts.  However, Republicans have seized momentum from the political wind and have put forth a budget in the House of Representatives which puts through deeper cuts in non-defense discretionary spending than the President’s own budget.  Both the Administration’s budget and the one put forth in the House have received a lot of criticism with a mix of praise.  Deficit hawks and Tea Party supporters have praised the House budget, and less hawkish analysts also concerned with education and infrastructure have been sympathetic towards President Obama’s.

I’d venture a guess based on polling numbers from various news agencies and organizations that the average American is fairly concerned with America’s and their own state’s deficit problems.  At the same time most are more deeply concerned about the economy, growth, and employment.  Coming out this week in the Washington Post (article can be viewed here) was a report by Mark Zandi, an economist at Moody’s which has predicted that if the House budget were to become our nation’s budget 700,000 jobs

Policymakers BEWARE: Another Rustbelt on the way?

By Marshall Kirby, Public Policy Analyst

There has been a lot of media attention paid to the plight of cities in the Midwest, Rust Belt, and other areas which have experienced the economic hardships which come with deindustrialization.  The recession has hit these areas hard, and has increased the hardships faced by their residents with increased unemployment, lower wages and incomes, higher poverty rates, and increased reliance on public assistance programs.

However, there has not been a lot of attention paid to the Sunbelt – or the region of the country which was supposedly where jobs and economic growth were most stable.  However, in many cities and counties across the Sunbelt, which stretches across the southern US from east to west, the poverty rate has jumped faster and more significantly than any other region.  The Sunbelt is not alone as areas which were experiencing rapid growth like the Mountain west and the Pacific Northwest have experienced similar trends.  While poor inner cities in the Midwest like Detroit and those in the Northeast like Buffalo and Newark still have higher poverty rates, the trend is definitely noticeable and trickling out into once booming suburbs in the south and west.

Some explanations of this phenomenon can be seen as specific to the particulars of this recession.  For instance, those who have studied this note several concurrent and related problems with areas in the Sunbelt and the west.  Both areas have seen a significant fall in property values, and the current economic climate has impacted suburban areas due to fewer opportunities available to them (compared to major cities).  The major trend is that these areas developed and grew from the housing bubble, which fueled not only the construction industry in these regions, but also service sectors.

Policymakers’ Logic: Cut Small Business Funding in order to Boost Small Business and Job Creation

By Marshall Kirby, Public Policy Analyst

Almost everyone knows America is facing a fiscal and budget crisis.  Years of spending more than was brought in have now caught up with us, with some help from a recession.  You’d be hard pressed to find an economist or policy analyst who would argue that this is not a major concern for the economy and nation as a whole.  However, you do find debates in the policy solutions legislators propose.  Should we make serious cuts in budgets to reduce the deficit, or do we make gradual cuts given that we still are in the midst of high unemployment and economic uncertainty?  There are serious and sound arguments that each side can make.  But when it comes down to it, there needs to be a sound strategy of what we can realistically cut without producing negative short, mid, and long term implications for the economy at large.

This is where many people get frustrated (including myself).  There are a lot of things that the government spends on that are wasteful, just as there are many valuable programs that promote growth and important social causes.  However, this does not help in quantifying these areas – in fact we live in a highly partisan time and each party’s anathema is the other’s idea of a successful program.  However, it seems in the past few weeks that Democrats and Republicans have found some bipartisan common ground – albeit with a frightening proposal.

Senators Mary Landrieu and Olympia Snowe both on the Senate Small Business Committee, have formed a cross party alliance and have drafted a letter already sent to Small Business Administration head Karen Mills.  The leaders request that Ms. Mills come up with programs which can be “cut” or “eliminated” without hampering the ability of the SBA to operate and serve the Small Business Community.  Both Senators in the past have been avid supporters of the SBA and of promoting small business interests.  It seems even stranger in that the previous decade was marked with reductions in the budget.  In 2006, the budget was $440 million, down from 2001 when it was $674 million.  To President Obama’s credit, he restored some of the SBA’s funding in 2010 bringing it $687 million (this is a nominal increase, but when accounting for inflation, it represents still a lower proportion of funding than in 2001).  The stimulus bill did provide additional money for small business loans, but with that funding drying up, the future is uncertain for the types of programs and loans it will be able to deliver to business owners and entrepreneurs.

While Hispanic and other Minority Youths Suffer up to 32% Unemployment, Proven Solutions are Often Ignored

by Marshall Kirby, Public Policy Analyst

At this point, nearly every worker in America can see that in economic terms our country is no longer suffering from a recession.  However, while our economy is no longer contracting, and is growing at very modest levels, the labor force has yet to see any meaningful reduction in jobless rates.  This is a very frustrating development, as many people claim that there are two economies which are diverging very quickly.  One has corporations which have weathered the crisis and are now back to making strong earnings, with an executive level management who have also weathered the storm.  On the other end of the economy many workers are experiencing stagnant wages, very few job openings, and lack of economic mobility.

In subsectors of the labor force, the frustration is even more apparent from employment data.  For young workers, aged 16-24, the unemployment is extremely high at 20%.  When broken down by race, the numbers get very frightening.  Latino youths have a 24% unemployment rate, and African American youth have an even higher rate at 32%.  These numbers are not only frightening, but unacceptable as both economic and non-economic ramifications will be seen in both the near and long term.

Policymakers and community advocates have been very sharp laying the blame on the usual suspects.  Failing schools, high crime, discrimination, the recession, and economically depressed regions have been offered up as the cause.  The truth is that all are to blame, and there is certainly enough of it to go around.  Our education system is becoming less competitive, and we currently are failing to educate 30% of our youths enough to even graduate from High School.  In the end, this puts the youth at a disadvantage.  Job growth both now and before the recession was mostly concentrated in sectors which require at least some college education.

Bully Pulpit for Infrastructure, Broadband, and American Investment

by Marshall Kirby, Public Policy Analyst

President Obama laid the foundation of the general goals of his Administration for the coming months ahead.  Imploring a divided Congress to act in favor of enhancing America’s physical infrastructure through roads, railways, redesigning our ports and airports, making a more efficient energy grid, expanding research on green and alternative energy, and expanding access to broadband.  Encompassing all of these, President Obama argued that America’s economy will be stronger, produce better paying jobs, and be more competitive.

Public investment is not a new idea, and since the New Deal under FDR, politicians have been pushing agendas which encompass education, infrastructure, and technology.  In the 1990’s President Clinton had his own policy agenda which encompassed an investment in technology and research science after the breakthrough of technology like the PC and the internet.  Since Clinton, conservatives have been very skeptical of public investment in these areas, and President Bush pushed for investment in education through No Child Left Behind.  Even recently, President Obama, in advocating for the Recovery Act, stressed the importance of construction and infrastructure projects.  His idea hit strong Republican opposition, and infrastructure became a watered down portion of the stimulus.  Instead of pushing for the most crucial projects, the Administration looked to “shovel ready” ones which would put the hard hit construction sector back to work.

Does Obama mean it this time? Businesses hope so . . .

by Marshall Kirby, Public Policy Analyst

President Obama recently announced a move which has garnered significant attention in the political and business communities.  The announcement amounts to a review of current regulations which the Federal government has placed on businesses and the way they operate.  This move has come as a bit of a surprise, but was not entirely unanticipated.  With the Democrats losing control in the House of Representatives and losing several seats in the Senate, and with the White House facing low approval ratings, most political insiders and commentators have expected Obama to adopt more centrist policies and work harder at improving a sputtering economy.

Since entering office, President Obama has been hit repeatedly from conservatives and the business lobby over concerns of higher taxes and a more encumbering regulatory environment as a result of health care reform and the proposed cap and trade legislation.  Last year, the Administration engaged in a very public battle with the US Chamber of Commerce over legislation with the US Chamber of Commerce accusing the President’s policies of being job killing and unfriendly to business.  Tom Donohue, the President and CEO of the US Chamber even went so far as to say that US based businesses were facing a threatening “regulatory tsunami” (Wingfield, Brian).

The Economic Consequences of the Dream Act

by Marshall Kirby, Public Policy Analyst

It may be down right now, but it is anything but out.  Given our belief in its eventual revival, we thought it might be pertinent to take a closer look at the economic implications of the Dream Act.

The DREAM Act (Development, Relief, and Education for Alien Minors) has been a contentious piece of legislation from its very beginning.  Legislators and the American public seem to be more polarized than ever on virtually everything, especially the complicated legal, economic, and moral implications regarding immigration issues.  One only needs to look back several years to recall the firestorm of activism which Comprehensive Immigration Reform created.  The DREAM Act has not proven to be any different as activists on both sides seem keen to repeat slogans to key up their base.  On the right you are likely to hear calls of “amnesty” and on the left you will hear calls of this being a civil rights issue.

The specifics of the DREAM Act varied with each version drafted by legislators.  The over-arching goal is to provide undocumented young people who have lived in the United States a path to citizenship to allow them to reach their full potential.  In order to be eligible, an individual must be 16 years old, born outside of the US, and be brought to the United States by others (i.e. their family).  Furthermore, the individual must volunteer their service in the military or graduate college with at least an Associate’s degree.  This certainly is a noble goal, and one which is relevant to the situation of immigration.  However, like all federal legislation – it never is really that simple and the bill is so complex with good and bad policy interventions mixed in.

The DREAM Act recently failed passage in the United States Senate after it had passed the House of Representatives.  The only thing that remains clear is that our immigration system is clearly broken and in dire need of repair.  As Americans, we tend to forget that we are citizens of a country which millions of individuals across the world are willing to go to great lengths to come to whether legally or illegally.  They come for a multitude of individual reasons, but collectively they all fall into three general categories – political and individual freedom, safety and security, and a chance for economic prosperity.