Triangle small business owners say a jobs bill approved by the U.S. Senate on Wednesday includes a number of measures that could spur economic activity and job creation. They also warn that the economy's problems remain profound, and that the proposed mix of tax credits and breaks may offer little relief to companies that most need it.
"A lot of businesses are already hurting. They've already circled the wagons," said Pete Pagano, who employs 50 people at the Tir Na Nog Irish pub in downtown Raleigh. "They're not making large expenditures."
The $35 billion Senate jobs bill passed Wednesday by a 70-28 margin, with 13 Republicans joining with a majority of Democrats. Both North Carolina senators, Republican Richard Burr and Democrat Kay Hagan, voted for the bill.
House leaders promised swift action on the Senate bill, but major discrepancies remain between the Senate bill and a much larger and more expansive jobs bill passed by the House.
With the national unemployment rate remaining stubbornly high at 9.7 percent in January, politicians in Washington are under increasing pressure to do more to put people back to work. With the latest North Carolina jobless rate even higher, at 11.2 percent, state lawmakers also have pledged to make job creation a top priority when the legislature reconvenes in May.
The U.S. Senate bill would exempt employers from paying Social Security payroll taxes this year on newly hired workers who have been unemployed for 60 days or more, and provide a $1,000 tax credit for any worker who is retained at least a year. It would also allow businesses to write off new equipment purchases as an expense rather that having the investment depreciate over time.
The temporary elimination of the employers' Social Security payroll taxes would offer some immediate relief, said Billie Redmond, CEO of Coldwell Banker Commercial TradeMark Properties in Raleigh. The Social Security payroll tax is 6.2 percent, or $2,480 a year for an employee making $40,000.
"People are extremely focused on how to reduce their operating expenses," Redmond said.
Many companies have already slashed expenses to the bone and reduced staffing as sales have declined. They have put off buying new equipment or investing in technology systems in an effort to conserve cash.
Companies aren't likely to hire and start investing until they see a sustained uptick in business, said Gregg Thompson, director of the state chapter of the National Federation of Independent Business. "A small business can't hire a new employee if there is no work for the employee to do," he said.
Elaine Buxton, president of the Cary company Confero, which helps merchants improve customer experiences by acting as "mystery shoppers," added three employees last year. Buxton does not plan to expand this year beyond her current staff of 23, and she said a jobs bill is unlikely to change her mind.
"We bring someone on when we feel there is a business case for it," Buxton said. "I can't imagine having a small tax break being something that would put us over the edge. The tax break is really for a year. We hire people thinking they will be here a very long time."
Drops in a bucket
Any jobs created by the Senate bill will likely pale in comparison to the 250,000 North Carolina jobs and 8.5 million total jobs that have been lost since the recession officially began in December 2007, said Michael Walden, an economist at N.C. State University.
"At best this will be in the six figures -- that is, clearly under a million jobs," he said.
Efforts to reach Burr were unsuccessful. In a posting on his Web site explaining his vote in favor of the Senate bill, Burr said he is "hopeful that this deficit-neutral legislation will provide tax relief to those employers who are in a position to hire and keep employees."
Hagan said Thursday that the jobs bill is a first step. She urged the Senate to follow with legislation that will extend more tax credits for research and development and provide additional unemployment benefits.
Hagan also noted that the jobs bill is unlikely to do much about one of the biggest challenges facing small businesses: access to credit.
"I'm still hearing from many small businesses that are having trouble with lending and that are not able to get loans, we're still working on areas like that," Hagan said. "This is really a first step. There is still a lot of work to be done."
