The Big Business of Government Spending

By: Jordan Ferchill, Women's Initiative

The question of whether or not to cut government spending to reign in the federal budget deficit is the political battle raging in Washington these days. Some say that we have to decrease the deficit to get the economy back on track, while others argue that we need to spend our way out of the current recession. In recent testimony given to the congressional commission on fiscal responsibility and reform, WIPP national partner, Tara Olson, explained that 83% of women business owners favor decreasing the deficit. Meanwhile, a June 11-13 USA Today/Gallup poll shows that 60% of Americans are in favor of increasing government spending to stimulate the economy. What accounts for this radical difference in the opinion of women entrepreneurs and the public at large? Does increased government spending eliminate the competitive edge that many women-owned small businesses have by unfairly subsidizing their competitors?

Government spending in and of itself does not necessarily put small, women-owned businesses at a disadvantage. However, the results of a recent study by Tischler & Associates indicate that many chain stores are tacitly and massively subsidized in this country through tax dollars. The study showed that fast food restaurants incurred a tax deficit of $5,168 per 1,000 square feet, with big box retail developments trailing close behind at a loss of $468 per 1,000 square feet, and shopping centers at a loss of $314 per 1,000 square feet. On the other hand, the study showed that in general local businesses create net gains for tax payers. These findings suggest that given the current allocation of tax dollars, increased government spending would in all likelihood benefit big business and make competition more difficult for small businesses like those that are cultivated by Women’s Initiative.

Training for What?

By: Elizabeth de Renzy, Researcher & Data Analyst

A New York Times article on Monday – After Training, Still Scrambling for Employment – confirmed what we at Women's Initiative for Self Employment have long suspected: job training is only useful if there are jobs to be had. On the other hand, microenterprise training is a proven method of job creation. Our white paper – Job Creation through Microenterprise Development – shows that the women who go through the small business training program offered by Women's Initiative not only produce jobs for themselves, but for others as well. In fact, in 2009 alone, Women's Initiative clients created more than 2,200 jobs.

It’s time for the government to realize that no amount of job training is going to help people find employment when there are no jobs to be had. With the number of unemployed workers still outnumbering job openings five to one, it is more important than ever that federal funding through the Workforce Investment Act should focus on job creation as well as job training.

Current job training programs appear to be operating under outdated assumptions about the economy. “A lot of the training programs that we have in this country were designed for a kind of quick turnaround economy, as opposed to the entrenched structural challenges of today,” the New York Times quoted Rutgers University labor economist, Carl E. Van Horn saying.

A study conducted by the Department of Labor showed that, even before the recession, job training programs resulted in little or no increase in earnings for participants. In contrast, women who participate in microenterprise training programs are seeing significant increases in earnings. Women’s Initiative graduates typically increase their income an average of 75% within the first 12 months after training.

In a Huffington Post op-ed Julian L. Alssid, Executive Director of Workforce Strategy Center in New York City, agreed that skills training alone isn't enough without job creating strategies.

Consider these three reasons to include job creation through microenterprise training in our workforce investment strategy:

· 18% of all US employment is in the microenterprise sector.

· Microenterprise training enables unemployed workers to create jobs for themselves and others in their community.

· Microenterprise training results in an increase in income and assets, thus stimulating the economy.