It’s the economy, Stupid

Recent Department of Labor’s May employment figures revealed a shocking number: New jobs last month rose by only 75,000. That’s dramatically below expectations.

Even worse, the number of new jobs created in March and April were revised down by thousands from the initial Bureau of Labor Service reports. The public is now being warned that a recession might be on its way because big employers are cutting back on production and growth.

As dismal as the overall employment statistics might be, the situation with small businesses is far more worrisome.

Small businesses with fewer than 50 employees are responsible for most new jobs. The majority of these come from startups with 4 or fewer employees.

Small businesses led us out of the Great Recession. They added workers during bad times when big corporations preferred only minor workforce growth as they waited on the recession to end.

A vibrant small business economy is clearly essential for our nation’s financial health in good times and especially bad times.

That’s why a different analysis of jobs, barely mentioned in the media, is more alarming than the Labor report figures.

The ADP National Employment Report is a highly respected private sector assessment of non-farm private sector payroll data. In theory it is measuring the same state of jobs in the country but its methodology yields results that can be considered more accurate.

According to the ADP report for May, only 27,000 total new jobs were created.

Even more shocking was that small businesses shed 52,000 jobs in May. Most of this 50,000 job decrease came from businesses with fewer than 20 employees.

The ADP report shows the small business job loss wasn’t just in retailers. 33,000 came from the “goods-producing sector,” with small businesses of fewer than 20 employees accounting for 24,000 of these lost jobs.

Not only did existing small businesses bleed jobs in May, the crucial new startups were not making up for the losses. In fact, our nation is in a period of very low new small business startups.

If a new recession is around the corner, our small business sector might not be able to stave off a depression this time.

As we move through this political campaign season, our elected and would-be elected leaders need to start focusing on this serious economic problem.

The 2017 federal tax law has given us a rapidly increasing national debt to give $1.5 trillion of benefits to big corporations and the wealthy. Neither helped most small businesses or gave the average family the promised big income boost that was to be spent with small businesses.

Growing college debt takes money out of our local economies, money that could be spent for small business goods and services.

Health care costs are escalating. Not only is this reducing other spending but putting a financial strain on small business owners who typically don’t qualify for premium subsidies to buy insurance.

Mr. Knapp is CEO of the SC Small Business Chamber of Commerce.