August 25, 2011
Petaluma, Calif. - Friday Federal Reserve Chairman Ben Bernanke will speak on the economy in Jackson Hole, Wyoming. The latest economic trends suggest that Chairman Bernanke should turn to small businesses to stimulate the U.S. economy.
The U.S. Census Bureau indicates that small businesses create 90 percent of all net new jobs. Small businesses are responsible for half of the private sector workforce, half of GDP and more than 90 percent of U.S. exports. More than 90 percent of U.S. firms have less than 100 employees, and there are more than 28 million small businesses in America.
Since 2009, small businesses have received only a small fraction of the stimulus funds. Economic data indicates the government’s policy of focusing stimulus funds on banks and corporate giants has failed. The latest data from the Labor Department shows U-6 unemployment at 16.1 percent. The small business sector is the last untapped resource to stimulate economic growth.
Federal law stipulates that a minimum 23 percent of all federal contract dollars be awarded to small businesses. This model uses existing federal infrastructure spending to create demand among the nation’s chief job creators, which increases cash flow, allowing them to expand and hire.
However, the latest analysis of federal contracting data by the American Small Business League (ASBL) indicates that small businesses are receiving far fewer contract dollars than the congressionally mandated 23 percent. Of the top 100 small business contractors during 2010, 61 were actually large businesses or subsidiaries of large businesses.
Some of the companies that received small business contracts in 2010 were General Electric, AT&T, Dell, Raytheon and Lockheed Martin. Also among the 2010 U.S. small business contractors were Italian defense giant Finmeccanica, Rolls-Royce and British Aerospace (BAE).
In Report 5-15, the Small Business Administration Office of Inspector General (SBA IG) described the abuse as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today."
The ASBL maintains that the only way to stimulate the economy is to stop diverting small business contracts to large corporations.