Small business’ value in job creation a major debate with economists

Posted by Justin Hesser on April 17, 2012

As the retail and food services industries saw record sales in March and recent employment reports show an actively increasing jobs market, many economists speculate on the role that small businesses really take in job creation. An April 17 article from New York Times contributor and former senior policy-maker for the Reagan and George H.W. Bush administrations, Bruce Bartlett, commented on the small business sector's role in job creation.

According to Bartlett's article, about 8,350 companies are eligible to be deemed as a small business under the Small Business Association's (SBA) new definitions from 2009. Of that 8,350, roughly 958 companies were previously considered as large businesses.

The article goes on to describe how Oprah Winfrey – a billionaire producer and television personality – only employs about 400 people under her production company, granting her to the right to claim herself as a  small to medium sized business (SMB) and receive the tax cuts and incentives the federal government allows for small businesses that may struggle to employ two or three employees.

The same holds true for the New York Giants, who only list about 210 employees, yet still made $1.3 billion in 2011, allowing them to reap the tax benefits of The Small Business Tax Cut Act as well as the recently passed JOBS Act.

Of course, Oprah and the New York Giants are outstanding examples. Other data shows, though, that the average size of a small business has decreased from 7.5 employees in the 1990s to 4.7 employees in 2011, further complicating the debate on what role the sector plays in the economy and job creation.

As small business' role in the American economy and job market continues to be a hot debate for years to many SMBs may want to invest in the services of software developing companies to create custom database software to help them stay up to date on their employment numbers, growth rates and the tax benefits they may experience.