Small business drives our economy

Tulsa Today has posted its story on Monday's County Commission meeting which includes comments from various players in the process. You should go and read the whole thing, but here are a couple of quotes I want to highlight:

“Revitalization will come from the private sector when it comes” said Tulsa Real Estate Publisher Teresa O’Rourke. “Officials keep offering tax increases, but without the focus on rebuilding neighborhoods – much more crucial to revitalization. Downtown housing is more important to retail businesses and entertainment venues than any arena has ever been in any city.”

Teresa O'Rourke is exactly right. (By the way, she publishes an excellent monthly newspaper -- My Hometown Neighborhood -- which you can find at Albertson's, Reasor's, Walgreen's, and other locations around Midtown.)

Here's the second quote from Mayor LaFortune:

When questioned on the regressive nature of sales taxes and their impact on small business and financially struggling families, LaFortune said, “Small business is the backbone of Tulsa’s economy and I am trying to create the draw for big business to come in and bring the jobs with disposable incomes that will flow to small businesses throughout this region.”

It's worrying to read that our Mayor holds to this misunderstanding of economics and is allowing it to guide his policies. He seems to picture big business as the economic engine, with small business being pulled along behind, as if in a trailer. There are two misapprehensions behind his words: (1) Only big businesses (and big facilities like convention centers and sports arenas) bring outside money into the local economy. As the big businesses pay their employees, their employees buy things locally from small businesses. Which brings us to misconception (2): Small businesses are all retail and service establishments wholly dependent on local customers for revenue.

In fact, many Tulsa small businesses are engaged in providing goods and services to the rest of the US and the rest of the world, bringing new dollars into the economy. The Internet makes it possible for a company of any size to have a worldwide sales presence, which allows even more entrepreneurs with a dream to find buyers around the world who need what they offer.

The National Federation of Independent Business(NFIB) has research showing that small businesses are our main job creation engine:

Nonetheless, a fair summary of the relevant research is that small business has created about two-thirds of the net new jobs in the United States since 1970.

Far from being dependent on the health of big business, small businesses generate their own economic activity, which cushions the blow when big businesses are suffering.

The proportion of jobs created varies notably over the business cycle. Large firms appear to create relatively more toward the end of a cycle. Small businesses create virtually the only net new jobs during recessions and the early to mid portions of an expansion. The number of jobs it creates tends to be constant across time. As a result, small business stabilizes the economy over the business cycle while larger firms destabilize it through wild employment swings.

People aren't born full-grown and neither are businesses. Some of today's 10-person firms could have thousands of employees in 10 years. Dollar Thrifty Group, one of Tulsa's largest employers, began as a small business here in Tulsa over 50 years ago. We need to make Oklahoma hospitable to entrepreneurs who want to build and grow a business. Right now our tax and regulatory climate is a deterrent, driving ambitious dreamers to business-friendly states like Texas, where you can keep more of your hard-earned money.

Michael DelGiorno of 1170 KFAQ has been saying investing $1 million each in 350 small businesses would give us more jobs and more economic growth than giving $350 million to one big company. The facts about small business suggest he's right. At the least, we can avoid heaping higher taxes on small businesses, so they can afford to grow and hire.