Why does a small business owner hire additional staff?

[jemelanson]

There has been so much discussion about small business owners and that not continuing the Bush Tax cuts for those with incomes over $250,000.00 would cause small business owners to not hire people.

I have never owned a business. I have worked for small business and for big corporations as an accountant. What I have learned over the last 30 or so years is that any business is not going to hire new people (create new jobs) unless there is an increase in the demand for their goods or services. If there is not increase in that demand, there is no reason to hire more people. If the demand for their product or service falls, then it is time to let staff go. It is about supply and demand.

If the customer base does not have money to spend, then, the demand goes down and business owners have to reduce their supply.

If a big employer has to cut back on the number of employees that has a snowball effect on the small businesses in that area. It is not just their employees that are effected. The loss of those jobs and the money spent in that area by those employees which is now gone. Effects all the businesses in that area, there are not as many people going out to eat, there are not as many people buying at the retail stores, and it effects the entire community.

Programs like unemployment insurance help and there are requirements in every state that require that anyone applying for unemployment benefits show that they are actively searching and applying for jobs, failure to accept a job offer results in a loss of benefit. The idea that people will not accept a job until their benefits run out is insulting and shows the ignorance of the person making that claim.


Also if an applicant is not able to work because of illness they do not qualify for benefits.

I have also worked as a tax auditor for a state employment commission.

[annabanana]

1. I am guessing it's because they can't keep up with demand.

I doubt very much that it has anything to do with tax cuts.

[PBS Poll-435]

2. Really depends on the industry

If I was going to have to prepare more income tax returns next year than I could handle with my current staff, I would need to hire additional staff.

But it really is different in other industries. If you have more people coming to your restaurant then there are tables, those folks just have to wait.

[Jackpine Radical]

3. Oh, you silly.

They do it because of their exuberance at the reduced tax rate on their income over $250K. That's why there have been so many jobs springing up everywhere in the last 10 years.

[blondeatlast]

5. Exactly! Everywhere I go I see managersoutside businesses begging

for people to come in and work!

Or... :shrug:

Well, I do see people begging and on the street, but they aren't wearing suits....

[Recursion]

11. We've been trying to fill 4 positions for 3 months

Though, in fairness, Autocad specialists don't exactly grow on trees.

[knitter4democracy]

12. Have you gone to the local tech school?

Our county's tech school that covers the area high schools has a great Autocad program, and I've been impressed with what our students show me that they're doing in the program (my brother's a CEO of a manufacturing company, and my dad was a mechanical engineer who tried to put Autocad on this English major's computer in college).

[Recursion]

18. Sorry, I left out the other half

I should have said "Autocad specialists with training in naval architecture"

[knitter4democracy]

21. Hmm. A bit trickier.

What if you talk with the local tech school's Autocad teacher about it? Maybe you could do an apprenticeship program through the local community college and grow your own people?

[Recursion]

22. Yeah, we have a "farm program"

But there's nobody close to finishing a degree at this particular moment.

Naval architecture is a weird field; there really aren't enough people going into it and all the shipyards have to fight tooth and nail for the people who do.

[blondeatlast]

13. Fudge--I know some out here; dunno if they'd want to go up your way though.

I will mention it though.

[theoldman]

4. As an accountant you should explain that the tax is on income after deductions.

Too many people think that the tax is on gross income which for a small business may be $500,000. They forget that after business expenses the taxable income may only be $200,000.

[atvslim2004]

15. so true!!

I have been trying to prove that same point to some people, they just don't listen.
I guess they have been brain washed by a certain few people that I will not even bother mentioning.
I have owned my own business for 10 years now, and if my gross profits were enough I would gladly hire new employees.
but I make no wear even close to $100,000.00 and that is before all of my expenses.
I am just a single mother, kind in the line of Paula Dean, maybe some day I will hit it big like her.
but for right now I am just getting by.
I need more costumers to grow my business.
but big business are hoarding there money not hiring, they should know that effects everyone.
if people do not have a job, how can they expect those same people that don't have a job to buy anything.

the tax cuts to the rich do not encourage more jobs!!!!

[Ian David]

6. The guy running the supermarket will hire extra people for the cash registers...

... when the lines are too long, because he has a high volume of customers.

He is NOT going to hire more cashiers to stand idle by unused cash registers because he got an $80,000 tax cut on his personal income.

[Nikia]

7. Aren't employee salaries considered a business expense?

Then there would be less taxable income. New employees are hired in response to demand although I suppose there would be some cases where the business could be afraid that they not afford to hire additional staff despite demand. The additional expense would lower their taxes though.

[Recursion]

9. Yes, most companies hire with pre-tax money. But there are payroll taxes.

Though depending on how your business is set up that won't be true 100% of the time.

On the other hand, payroll taxes do come into play, and add pretty significantly to the cost of hiring someone; I'd definitely buy the argument that payroll taxes are a much more significant factor than plain old corporate taxes.

[old mark]

8. ONLY if it is absolutely necessary to keep up with the business - it is an expansion,

and NO ONE would do it because they get a tax break, only it the business required it.
Republicans lie constantly.

mark

[Recursion]

10. I could believe there are circumstances where payroll taxes tip the balance against hiring someone

That is, if you can only afford $X right now, and with payroll taxes it costs $X + 1 to hire someone, then you may not be able to hire. Though I'd guess those are marginal cases rather than some big economy-wide trend; the big trend is pretty clearly just depressed demand.

[Barack_America]

14. Because he or she has to in order to meet demand.

Certainly not out of the kindness of their hearts. Some may use surplus money to expand, but if they don't have a corresponding expansion in customers the expansion is not going to last.

[lynne]

16. More work doesn't always mean more demand - it just means increased work load -

- A change in laws or work requirements, more forms to complete, more steps to accomplish the same task, will increase the amount of time it takes to achieve the end result and necessitate an additional employee when there has actually been no increase in demand or income. I saw this occur within the insurance industry. Used to be you'd take basic info to issue a policy. One form - one signature. Then they added pulling of credit reports. Then they added pulling of claim reports. Add the legal forms regarding rights and forms giving permission to pull those reports. Now you're filling out five forms when you were filling out one. Those additional forms generate further questions that have to be resolved. And it snowballs from there.

My point is that it depends upon the type of business. Hiring an employee isn't so much a sign of increased demand for your product as it is a sign of increased work load for whatever reason.

[jmowreader]

17. Two reasons

One is demand. We've already discussed that.

The other reason is business changes. If John's Restaurant, which is on the waterfront, decides to start a Water Taxi service from the new high-dollar water-view housing development to his restaurant, he's got to hire a boat driver.

Everyone here knows the other truth: no one ever hired anyone JUST because of a tax cut, and no one ever fired anyone JUST because of a tax increase.

[socialist_n_TN]

19. DEMAND! DEMAND! DEMAND!........

It's really a simple equation in this case. It doesn't matter one bit how much a business owner, small OR large, saves in taxes. If the demand is not there, the BUSINESS WILL NOT HIRE!

[OlympicBrian]

20. EXACTLY nt