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Over 20 years, true small business produced just 17% of new jobs

To the editor,
In defending his opposition to tax rate increases for the affluent, Speaker of the House John Boehner continuously says, "Small business is the engine of job creation in America." Even in a news conference, no one questions him. Yet, the statement is overly simplistic, under researched and misleading.
Perhaps no politician of either party wants to risk explaining the economic impacts of small business are limited, and "small business" is not what most voters think it is.
When looking at jobs in the American economy, investigators classify business as small, medium or large by establishment size. They calculate the number of new jobs produced in each tier and conclude small business does indeed produce the bulk of them. It seems to make sense. At any one time, there could be thousands of restaurants hiring. On the other hand, there are only 120 automobile assembly plants in the United States.
The conclusion, however, glosses over a couple of realities, both of which independently refute, or at least complicate, the speaker's adage. One is the very nature of business in the job-creation arena. The other is the difference between establishments (the unit of analysis) and firms.
First, the nature of business as it pertains to jobs:
Job destruction, job creation is a continuous process. Destruction occurs when an incumbent leaves a position. In calculating job destruction, the underlying reason for departure (death, promotion, termination, furlough, resignation, etc.) is not considered.
Creation is the opposite: A person enters or begins a job. Again, the underlying rationale (new hire, recall, transfer, etc.) does not influence the calculation.
The number of "new jobs," whether across the economy, in an industry or at an establishment, is a simple calculation: Job creation minus job destruction equals new jobs. (In the worst of times, this could be a negative number.)
So, for instance, if the restaurant down the street hired two cooks, and a dishwasher quit, analysts would say this establishment experienced two job creations and one destruction. Therefore, it generated one new job.
Every first Friday, the Bureau of Labor Statistics cumulates individual establishment numbers and issues its monthly "Employment Situation Report" – America's official "jobs numbers." Instead of parsing establishments by size, however, number crunchers could analyze jobs data by establishment age; that is, how long has an establishment existed? This analysis produces findings that muddy the establishment-by-size analysis.
Establishments in their startup year generate about two-thirds of all new jobs. In other words, startup establishments produce two new jobs for every one new job generated by all the establishments — regardless of size — that have existed for at least a year.
With this finding, the speaker might conclude, "startups are the engine of job creation in America." Instead of advocating tax breaks for business owners and managers, he might pursue strategies to encourage innovation and entrepreneurship.
Second, the difference between establishments and firms:
To produce valid findings, investigators must collect analogous data from comparable sources. "Establishments" are comparable sources. They are the places where people conduct business. They produce analogous data, their payrolls.
In the case of the "jobs numbers," the methodology is sound. Calculations are valid. Findings are accurate. Nonetheless, results can be misleading. The culprit is the unit of analysis, establishment size.
Consider two pharmaceutical retailers a block apart. Both the family drugstore on Elm Street and the CVS Pharmacy on Main Street conduct business onsite and have payrolls. Therefore, both are establishments for data collection purposes. However, even though CVS employs about 200,000 people with nearly 7,460 retail stores nationwide, its establishment on Main Street is a small business by definition — less than 50 employees. More to the point, the CVS Main Street store is small business in the data as is each of its other 7,500 establishments across the country.
The family drugstore is not just an establishment. It is also a firm by definition. The single establishment on Elm Street encompasses the totality of the family's business activity.
One the other hand, the CVS retail store on Main Street is a very small part of a much larger firm. The CVS firm is clearly very large business. The family drugstore firm is just as clearly small business.
Using firm size instead of establishment size as the unit of analysis flips findings on their head. When new jobs from the 12-month period from February 2010 through March 2011 were calculated — data beyond March 2011 were not available at the time of this analysis — the dichotomy was remarkable:
With "establishment" as the unit of analysis, small business produced 44 percent of the new jobs. Large business generated just 5 percent.
But with "firm" as the analysis unit, 17 percent of the new jobs came from small business. Large business spawned 56 percent.
Over 20 years (1990-2011), small firms produced 16 percent of the new jobs. Large firms generated 65 percent.
With these findings, the speaker might conclude, "Big business is the engine of job creation in America." Instead of advocating tax breaks for business owners and managers or pursing strategies to encourage innovation and entrepreneurship, he might suggest increasing subsidies to large corporations.
Poul Anderson, famed science fiction author and winner of the Libertarian Futurist Society's first Special Prometheus Award for Lifetime Achievement, summed up the complexity of problems in a sentence widely known as "Anderson's Law": "I have yet to see any problem, however complicated, which, when you looked at it in the right way, did not become still more complicated."
Robert Moran
Meredith

Last Updated on Friday, 17 May 2013 12:04

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Thanks for your constant commitment to young people of Laconia

To the editor,
We would like to publicly thank everyone who supported our recent "Chem-Free After Prom Party" for the students of Laconia High School. This successful and positive event, which was organized through the efforts of Officer Steve Orton and Students Against Destructive Decision-making (SADD), students and staff from Freedom Found and Stand Up Laconia, offered students who committed to being drug-free a truly wonderful time. In this initial effort, we had over 60 students join us for a night that was safe, drug and alcohol free and fun for everyone.
Our evening started after the prom ended. By 11:30 we are all on the bus in the parking lot of The Gunstock Ski Area. We took the bus, the cost of which was fully covered by our transportation friends at First Student, over to Funspot. There we had free reign of the games and bowling until 2 a.m. Students had a wonderful time but I think some of the chaperons may have had even more laughs while engaging in "Deal or No Deal" while eating pizza and donuts. It was great to see all the smiles and hear the laughter from our students and chaperons throughout our entire time at Funspot and we thank them for their support of this effort.
At 2 a.m. we loaded up the bus for a trip over to the Gilford Cinema 8. Thanks to their support, we were able to watch Iron Man 3-D on its opening night (technically, the morning of its second day) while enjoying some very outstanding popcorn. After the show, we held our give-aways and students walked away with gift cards, iPods and many other prizes, once again due to the significant community support that occurred to make this initiative happen for our students.
To wrap up the event, we took an early morning drive over to Weirs Beach and had a sunrise breakfast on the beach that was sponsored by our local school district food service program. In summary, lots of great food, lots of great company and a completely enjoyable event for all who chose to participate.
The following agencies and businesses are the reason this event was able to happen and we are very appreciative for their constant commitment to the young people of Laconia.
Thanks so much to: Laconia City Council, Laconia Police Department, Meredith Village Savings, Gilford Cinema 8, Gilford Mobil and Summit Distributors, Dunkin Donuts, McDonald's, Papa Gino's, Sal's Pizza, Uno's, Pizza Hut, Dominoes, Hart's Turkey Farm, T'Bones/Catus Jack's, The Kellerhaus, The Vintage Café, MC Cycle, New Hampshire Ball Bearings, Dr. Gauthier DDM , U-frame We-frame, St. Andre Bessette Parish, All MY Life Jewelers, Super Cuts, Tanger Outlets, Lakes Region Cupcakes, Mary Kay, Home Goods and Hair Excitement....and our parent and staff chaperones!
Steve Orton
LHS Resource Officer, Counselor
Jim McCollum
LHS Principal
Phil Reed
LHS Guidance

Last Updated on Friday, 17 May 2013 11:58

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Amendment intended to guarantee rights is used to take them away

To the editor,
Has anyone noticed the perverse use of the 14th Amendment by the U.S. Supreme Court, in the past several decades, in expelling God from our public school systems. The 14th Amendment was passed after the Civil War in particular to ensure equal treatment under the law for freed black slaves. A purpose that if you look at our history, it was seldom diligently applied to. I'd like to qualify that to say, at least until the civil rights movement of the 50s and 60s and then it seems we moved quickly from 14th Amendment equal protection, to affirmative action. Yet around this same time we find the equal protection clause of the 14th Amendment being diligently applied, or if we are describing the quality of this diligence, perversely applied, in cases to remove prayer and scripture reading from our public schools, which was a free exercise of religion, which should have been protected by the 1st Amendment, which should have been further strengthened by the 9th and 10th Amendments. They did this in the name of protecting the minority from the tyranny of the majority, where no tyranny was happening but for someone's hurt feelings.
Yet notice later, in the banning of the teaching of Creation in public schools and supporting of the teaching of evolution, no such protection was given to the minority,yet here there has been a clear tyranny of the majority in this. An amendment that was intended to guarantee men's rights has been used to take them away. How perverse is that?
John Demakowski
Franklin

Last Updated on Friday, 17 May 2013 11:52

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This interpretation of Second Amendment is not at all scholarly

To the editor,,
Dear Mr. Wiles,
It would truly be amusing if it weren't so sad that you chose to speak on behalf of Don Ewing. Where to begin in answering your diatribe, aka letter, in response to my query of weaponry for private citizens.
By your verbiage alone you allow us insight as to your feelings about the NRA, gun manufacturers, the Second Amendment and President Obama, just to name a few. Demeaning President Obama with all of your inappropriate and misleading labels is discouraging and disrespectful of his office.
Aren't we lucky as Americans to have a First Amendment to the Constitution of the United States, which allows you and I to have free speech in an open society. Just try to picture if we were living in a country where citizens are "muzzled" or imprisoned because they dare to speak out and voice their opinions.
What truly puzzles me is your so called interpretation of the Second Amendment. At best it is neither scholarly or in-depth and at it's worst totally misleading.
Although you feel that you had to interject your opinion, I am still awaiting an answer from Don Ewing to my recent query.
Bernadette Loesch
Laconia

Last Updated on Friday, 17 May 2013 11:48

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Why is target on law-abiding gun owners instead of criminals?

To the editor,
I sometimes wonder at things people say in their letters. For instance the other day James Veverka said something like, he was going to throw up if he heard the term law abiding citizen or law abiding gun owner. Now why in the world would that cause him to feel all nausea and sweaty. Is it the law abiding part? Funny turn of a phrase because I'd be more sickened by a non law abiding phrase such as, drug dealing felon or cereal murderer and things of that order.
Clearly James just can't stand it when his cherished liberal concepts get challenged. Taking exception to my description of references as a clutter, he dove into a study by John Hopkins Medical to support his contentions. To that I have to say, ho hum! John Hopkins is hardly an unbiased source. Like most big medical facilities it is 85 percent liberal and its studies are not trustworthy, at least by me. If you want an accurate report, I suggest James and the readers look to The Bureau of Justice Statistics. It says that gun crimes are down 75 percent since 1993.
To hear the left tell their story you would think it was we had seen a 75 percent rise in gun crimes from that time until this. Only about 12 of Americans are aware of the truth so effective has the fear and misinformation campaign waged by them and promoted by their followers who believe MSNBC, Saturday Night Live, Move On and the Colbert Report are real news shows.
The BJS also reports that criminals get their guns from family members and by stealing them as I wrote in my previous letter, which James had so much to say about.
As for all those gun crimes in Chicago, who does James say is committing them? That's right too, James omits that fact. Criminals, that's who, not law abiding gun owners or honest citizens, criminals. And not one prevision of the left's proposed laws targets these drug gang criminals. Everything targets the private gun owner. Their design is to abolish the 2nd Amendment and an individuals right to self defense. Not one prevision of the new laws would protect one child, one school, one gun free zone which we have seen attract the crazy, illegal gun possesor looking to create havoc, suffering and sorrow. The great compassionate left doesn't want to solve this problem. They want issues to run on, dramatic issues. They want to put their soap box's on children's graves and tell you that if only you elect them they will fix everything.
They lie.
Steve Earle
Hill

Last Updated on Friday, 17 May 2013 11:45

Hits: 438

 
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