If anyone out there had any confusion as to why we here at the FlashReport feel that labor union leaders are totally out of touch with reality, you need look no further than a recent blog post over at the ultra-leftist California Progress Report penned by Wille Pelote, Sr,, a big wheel with the California chapter of the American Federation of State, County and Municipal Employees, AFL-CIO. We would take the time to counter Pelote’s totally crazy assertions — but we couldn’t possibly do so in a more informed and articulate manner than longtime FR friend John Kabetack, Executive Director of the National Federation of Independent Business, California…
BUSINESS — CALIFORNIA
SMALL BUSINESS, NOT GOVERNMENT CREATES JOBS
Willie L. Pelote, Sr.
Assistant Director, Political Department
AFSCME California
1121 L Street, Suite 904
Sacramento, CA 95814
Dear Mr. Pelote,
In a recent article posted on The California Progress Report, you challenge the “resolve” of legislators to look out for the interests of government employees over the livelihood of millions of small business employees and assert political retribution for those who stray from their “values”. You claim that by increasing taxes, government will be looking out for “ordinary” Californians. I must then assume you mean that the 83 percent of private-sector workers are “extraordinary”.
California state employees provide a valuable service to all our citizens, but it is the private-sector employers and employees, particularly small businesses, that grow the economy and generate the tax revenue for California. When small businesses grow, so do state revenues. A brief review of employment and state revenue data from the past decade shows that changes in small business employment is directly proportionate to changes in state revenue. The truth of the matter is simple: Small businesses create jobs; jobs create economic activity; economic activity creates tax revenue; and it is this tax revenue that provides for important public services.
Small businesses create more than three-quarters of all jobs in California, yet they also bear a greater burden of taxes and regulations. The Schwarzenegger Administration released a report late last year that found that the total cost of complying with regulations per small business in California is $134,122.48. The most glaring number is the average loss of one job per small business. That seems very small except when you consider that California currently has more than 770,000 small employers, plus many more sole proprietors who want to expand in the future.
If our state leaders would instead focus their energies on assisting small business owners with compliance and easing regulatory burdens, they might be able to create more jobs for those in our communities.
However, you demand that legislators add to small business’ burden by increasing taxes under the clever guise of “closing loopholes”. Among your alleged “loopholes” involves the taking of $2 billion through a three-percent withholding mandate on independent contractors. The unfortunate reality of your proposal is that $1.9 billion of this “new revenue” is not a revenue increase at all; it is a government money grab from the pockets of small businesses. Artificially inflating tax revenues through independent contractor withholdings may on the surface sound tame and safe, but taking money that “mom and pops” need today, and removing billions of dollars from California’s economy, will decimate the cash flow of struggling small employers. If they cannot pay their bills, then California workers lose.
It is unclear how you conclude that boosting government employment will somehow save our economy. After all, between 2001 and 2009, when private-sector employment dropped 654,500 jobs, government employment ballooned by more than 129,000 positions (according to data compiled by the California Manufacturers & Technology Association). Trading five private-sector jobs for one government job does not seem to be a very strong return on investment. How can we claim to be serious about “adhering” to our values when the size of our government continues to explode while these “extraordinary” Californians working for small businesses keep losing their jobs?
However, despite our differences, you do make a valid point in your alert to California legislators. Our elected leaders do, indeed, have a choice. But what they must decide is whether to continue feeding the government fat cat, or to give critically-needed help and hope to those Californians that truly need it the most: the struggling men and women on Main Street who have and will lead us back to economic prosperity. A growing economy will benefit California’s “ordinary” and “extraordinary” Californians, as well as everyone in between.
Sincerely,
John Kabateck
Executive Director
National Federation of Independent Business, California