Small Business Men Not Suffering from the Blues

Robert Waldmann

Worthwhile Canadian point. Nick Rowe looks at Catherine Rampell’s graph, which everyone has been talking about, and notes the dog that didn’t bark. Very few small businessmen are complaining about the quality of labor. This basically proves that the argument that the incerase in unemployment is due to missmatch is wrong. If the problem were too many construction workers and no workers in other fields, than firms in other sectors would be complaining about trouble finding qualified workers.

I add that they might also complain about the cost of labor. These are really the same problem if the minimum wage and contracts negotiated with unions aren’t binding. Firms can always hire quality labor if they offer one million and hour.

Fortunately the graph has the fraction describing quality of labor and cost of labor as the number one problem one on top of the other and both shaded blue. The graph shows the fraction of small business men with the blues declining sharply.


I am kicking myself for not blogging about this before (I noticed the fact in the graph really I did). I try to make up for lost time after the jump.

Worthwhile US initiative.

And get a load of those yellow employers terrified by insurance companies. There was a sudden sharp drop in the fraction listing insurance as teh worse problem just about November 2008. Now part of this (as with the blues) is low sales driving other problems out of first place. Still the decline is very very dramatic. There is no similar decline in complaints about taxes (is there ever ?).

I think that small businessmen were naively optimistic about health care reform’s chances in congress and counted on HCR eliminating their problem buying insurance for newly hired workers so soon that it was worth hiring and paying through the nose for a year — oops in the event 6 years, but, hey, too late now employers.

I’d say the graph shows fairly strong evidence that HCR caused increased hiring by small firms. Now it might have reduced hiring by large firms (which feared a mandate which turned out to be fairly feeble).

For both the issue of the blues and the yellow, I’d like to see a graph of the fraction of small businesses naming something an important problem not just the most important problem. That way the numbers would not have to add up to 100% and one could really tell to what extent concerns about insurance, the quality of labor and the cost of labor declined and to what extent they were driven out of first place by collapsing sales.