I was in the Albuquerque airport the other day having a quick dinner before my flight home when two servicemen from Kirtland Air Force Base sat down near me. When I finished my meal, I went to the cash register to pay my bill and told the cashier that I’d like to pick up the tab for the two servicemen who just sat down. She politely told me that I couldn’t because another guest had already picked it up.
I can remember, not too long ago in the Vietnam era, when our men and women in the armed forces were not as well regarded as they are today. I didn’t hear of anyone back then offering to buy them a meal, let alone thanking them for their service. Many of them were looked down upon by the very citizens they were fighting to protect. Now, just a couple of generations later, they are revered and looked up to as the national heroes that they are.
Some of the business owners I meet with these days feel the same way that those Vietnam servicemen felt back then. They sometimes get the feeling that the general public, politicians and bureaucrats think all of them gouge their customers, pollute the environment and make way too much money on the backs of their hard-working employees.
Our elected officials play right into this myth while at the same time acknowledging that small business is the engine that can solve most of our economic problems. As proof, business owners point to all the anti-growth policies that have been enacted over the past few years. Laws like ObamaCare and minimum wage increases that make hiring workers prohibitively expensive.
Restrictive Dodd-Frank provisions have led community banks to finance fewer and fewer new businesses despite their unique knowledge of the local markets. It’s easier for an 18-year-old high school student to get a college loan than it is for a 25-year-old entrepreneur to get a small business loan.
Last month in California, voters approved a raft of new state marijuana laws presenting employers with hazy challenges when it comes to workplace drug testing. Employers should tread carefully when testing workers for pot under drug-free workplace policies. Firing or disciplining a worker for a positive drug test could open firms to legal challenges from employees.
In Los Angeles county, voters approved a ½ cent sales tax increase for Measure M to raise billions of dollars for transportation projects. This is in addition to over 30 school bonds and parcel tax assessments that passed and are also paid for by businesses.
According to a survey by the Kosmont-Rose Institute, eight Los Angeles area cities, including Los Angeles, Santa Monica and Long Beach, rank among the 20 most expensive cities to do business in the Western United States.
In Long Beach, where I live, the sales tax next year will be 10.25% but next door in Orange County the sales tax will be 7.75%. That means I’ll save $5.00 in taxes if I buy $200 at the hardware store in Seal Beach, a mile away from my house, instead of in Long Beach. The net effect will hurt small businesses in my neighborhood.
Entrepreneurs in this country are like salmon swimming upstream, they must overcome waterfalls, bears and man to make it to their spawning grounds. Yet despite all these obstacles some of them still make it.
Alvaro Garcia is a 45-year-old father of 3 living in the San Gabriel Valley. He came to this country from Nicaragua when he was 18 years old. While attending high school and learning English, he got his first job as a Domino’s delivery driver. The next year he was promoted to supervisor then district manager and a few years later he was able to buy a franchise.
When a Domino store became available, Garcia recruited his fellow employees to buy into what eventually became 22 stores doing over $7 million in sales. In 2013 he sold his Domino franchise and, with 3 partners, bought a Jersey Mikes sandwich franchise. Garcia now owns and operates 70 Jersey Mikes locations. He does more than $30 million in sales and is providing jobs to hundreds of people living in Southern California and paying thousands of dollars in taxes, permits and fees.
My family is another example of entrepreneurs helping this country. Between my grandfather, father, father-in-law, uncle, cousin, brothers and me, we have created thousands of jobs for all sorts of Americans as well as paying millions of dollars in taxes, permits and fees over the past several decades.
Last month the Wall Street Journal reported that small businesses account for 64% of all new jobs in this country and that companies less than five years old create more than 80% of all new jobs every year. Yet fewer than 500,000 new businesses were started in 2015, that is a disastrous 30% decline from 2008.
In the past eight years, more than a million new companies have “gone missing” from the economy. This absence accounts for an estimated 7 to 10 million jobs that, had they existed, could have provided employment for every one of the nation’s discouraged workers. Simply put, the U.S. will never reach full employment without more startups.
Donald Trump wants to “Make America Great Again”. One way he can do this by creating an environment that enables at least one million Americans to start companies every year. Such an outcome would assure his target of 4% GDP growth, as well as full employment.
In California, elected officials are trying to find ways to fight the incoming administration. Perhaps they should step back and see what’s missing in the golden state. There’s a reason Florida, Texas and other red states are growing. Those states have embraced an economic model that fosters job growth, lower taxes, fewer regulations and a government that is business friendly.
Yet here in California we have a state where a temporary tax was made permanent, a public pension plan is out of control and the governor and Legislature have no intention of cutting taxes or reducing regulations.
But what can you about it? One thing you can do is the next time you see a business owner at dinner or in the bar buy him, or her, a drink and thank them for their service to our country. For they are the Unsung American heroes.