April 28, 2011
Petaluma, Calif. – At a press conference Wednesday, Federal Reserve Chairman Ben Benanke raised concerns that the high unemployment rate will likely persist in the face of slow job growth. To date, the economic policies of the Federal Reserve, and the Obama Administration have largely ignored the fact that small businesses create over 90 percent of all net new jobs.
“At 8.8 percent, the current unemployment rate is elevated… and progress towards more normal levels of unemployment seems likely to be slow,” Chairman Bernanke said. (http://www.guardian.co.uk/business/richard-adams-blog/2011/apr/27/ben-bernanke-press-conference-live)
According to the latest figures from the U.S. Census Bureau, small businesses are responsible for over half of the private sector workforce, 50 percent of the gross domestic product (GDP), 90 percent of exports and innovations, and 90 percent of net new jobs. Ninety-eight percent of all U.S. firms have less than 100 employees.
Over the past several years, small businesses have received less than 5 percent of all money spent through various federal programs intended to stimulate economic growth. (http://money.cnn.com/news/storysupplement/economy/bailouttracker/) The economic recovery policies issued by the Federal Reserve and the Obama Administration have ignored U.S. Census Bureau statistics, and remained tightly focused on assistance for large firms. Large businesses have not created one net new job since 1977.
Small business groups like the American Small Business League (ASBL) support ending fraud and abuse in federal small business contracting programs as a means of directing federal infrastructure spending into the hands of small businesses, and creating jobs. Last year, Senator Mary Landrieu (D-LA) estimated that increasing contracts to small business by 1 percent would create more than 100,000 new jobs. The ASBL has estimated that addressing the diversion of small business contracts to large companies would raise the percentage of federal contracts awarded to small businesses by a staggering 18 percent, creating approximately 1.8 million jobs.
Since 2003, a series of federal investigations have uncovered billions of dollars a year in federal small business contracts actually flowing into the hands of Fortune 500 corporations and other clearly large businesses. In Report 5-15, the SBA Office of Inspector General (SBA IG) referred to the issue as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” (http://www.asbl.com/documents/05-15.pdf) President Obama recognized the importance of the situation when he stated, “it is time to end the diversion of federal small business contracts to corporate giants.” (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)
“I think it’s shocking that Chairman Bernanke, President Obama, and Treasury Secretary Geithner have all missed the boat on focusing stimulus efforts on our nation’s chief job creators, its small businesses,” ASBL President Lloyd Chapman said.