Sales Uptick Would Lead to Rehiring

To The Editor:
President Obama offers a $5,000 tax credit for small businesses per new hire/re-hire to “stimulate” job growth. But $5,000 hardly covers the cost of an added employee. How much job stimulation that may cause is in doubt.
A recent interview with a small business owner produced some insightful comments. This man said it wasn’t government money he needed. What he needed was customers and a return of higher demand for his products.
He said he didn’t know what he would do with more employees even if the government paid for them. An uptick in sales, however, would lead to re-hires of laid-off workers and eventually new hires too.
When there is a downturn in the economy and workers are laid off to save the business and keep remaining workers, productivity by necessity goes up and businesses find they can do quite well with fewer employees.
When there’s an upturn, re-hiring is slow, not just out of caution, but because the business has gone to leaner, more efficient policies and may accommodate returning or new employees, but not at the same level as before. Thus job growth in a recovering economy may appear slow partly because of better operational practices which make the business not just more efficient, but better able to compete in the marketplace due to lower cost of producing goods and services.
The basic function of business is not job creation but making profits and growing. From this, the happy result of jobs follows. Downturns often produce improvements in operations and a better future for surviving companies.
Throwing money or tax credits at the problem does little without an upturn in demand for products and services.
BOB LOVELL
Court House