Considering the Value of SMB's and Workers.

What is the value to society of a small business owner? What is a small business? A small business might be as  simple as selling flowers on a street corner, to an enterprise with 50 to 100 employees. A small business might serve a city or town. Such as being the only dry cleaner in town, or being the only ice cream stand around for miles. A small business might cater to a niche market and have selective buyers from all over the world. The more small businesses the better. Why? More Smb’s means that there are people willing to take risks in running a business. Furthermore more Smb’s mean more job opportunities for everyone. With job opportunities  comes the chance for a worker  to gain valuable experience. The more skilled a worker is the more money the skilled worker can demand to be paid. This in turn can help the Smb owner grow and expand  their business, in turn offering more job opportunities  to other persons seeking work. The cycle repeats itself in theory. In theory one worker or a small group of workers helps the Smb owner make their vision of their business a reality. Facebook is an example of a small group of workers who were skilled at computer programming and they helped Mark Zuckerberg turn his vision into reality. Zuckerberg needed skilled programmers to keep his business up and running, he needed it to be reliable and always on. Growth and expansion of the business created new opportunities  for other programmers, and even low level network technicians who were needed to build and maintain the server farms for Facebook’s website. Even the lawyers benefited from the success of Facebook. The bigger the company grew the more laws that started to apply to the corporation. Therefore there was a ripple effect in the economy in part just coming from the lawyer fees. But Facebook is an example of an Smb that grew into a corporate giant. Most Smb’s  don’t ever come close to the growth like Facebook did. Instead Smb’s focus on meeting the needs and demands of the local market that they serve. Typical Smb expansion might take the form of local of donut shop that gets very popular, then the owner decides to open another location across town. That location proven be profitable. In turn with every new location that is opened, and is proven to be profitable jobs are created, and people are able to buy life’s necessities even though it’s skilled or unskilled labor. Politicians like to hype the value of Smb’s when the run for office realizing the job generating potential that small companies create. As much as politicians want job creation they are always looking for new sources of revenue, and what better sources of revenue than the small businesses that are thriving and creating the very jobs that politicians love to hype so much. Not only does government seek to tax small business for additional revenue but it seeks to burden Smb’s with regulations that seek to protect the public and employees’ from every case of natural disasters and possible accidents in the workplace. All these regulations add costs to doing business for the small business owner. The more government regulate companies the more value it takes from the economy since the Smb owner might see the value of being in business dwindle away until they no longer see the value of operating their business. So at what point does government regulation becomes so burdensome as to stifle smb growth? That point is any point at which an entrepreneur no longer thinks that the value outweigh the costs of meeting regulations. Therefore though it seems unlikely, but politicians need to understand and weigh the costs to any proposed regulation that might overburden industry so as to might make it cost prohibitive to being in business. One could argue for tougher oversight of government agencies that make regulations on behalf of Congress, since these agencies are given the authority from Congress to make regulations as it sees’ necessary, which to me is wrong since the very notion of regulation making is left solely to Congress and the President according to the Constitution. Thus we could begin to look at the justification for government regulation and raise to question of the morality of certain regulations. But I will do that another time.

The value of employees.

Workers in donut shops might be considered unskilled labor since what they do can also be taught to anyone, thus they are easily replaced. Because of the value of the unskilled labor, their wages tend to be lower since society, and the market place value their skills less than that those of skilled labor. In contrast to this theory is the fact that many companies laid off/ fired some of their most skilled and knowledgeable people who tended to be older and who were expected to retire in twenty to fifteen years. Why? The most basic answer is because older more senior, in terms of years of service were making more money, as they get older their health care costs were expected to increase, thus costing the companies more than they were presumed  to be worth based in their skills. Thus the costs associated with an older worker rather than added value of the same worker became the determining factor as to whether to employ or fire certain workers. So we have a larger baby boomer population between the ages of 45-65, thus there are expected costs versus expected value. Are costs of an employee greater than, less than, or equal to the value that the employee adds to the company. Then we have to consider what effect  that the total cost and value of the employee will have on profitability. An example is the story of how Walmart for years had a position of greeter at all its stores. In theory here Walmart “valued” the position of greeter in its stores, greeting customers as they came in and acting as a security measure. But then Walmart determined that since the position was not a productive use labor capital that it need to cut the position from all its stores transitioning the costs to more productive uses of labor that are more profitable. So here Walmart determined  that the position of greeter was not as valuable to the companies bottom line, in a way it appears that it cut costs but in fact  it transitioned the costs of labor savings to the other departments that are more profitable for the company. In turn being more valuable to the company. In another example of value and employee cost is the notion in today’s corporate culture that unless the job you do can be billed to a customer you are not a valued employee because you are not adding to the companies bottom line. Today’s companies have to find the justification for the cost of having secretaries or administrative assistants as they are called. Again companies question what value admins add to an org. and whether or not the benefits of the costs  of a non billable position. Therefore job seekers in today’s tough job market have to be aware and ready to market what “value” they would bring to the company. In a nutshell companies care about two things when hiring new employees’ value and what increase in profitability can the company expect from the new hire, because companies have to be weigh the increased costs of bringing a new hire into the company. One might expect that unions might tap into the notion that companies value employees just for their ability to generate revenue for the company and that’s all companies value employees for. But that’s just it, the basic premise of any company is to generate revenue for the owners, and a return on investment. So the value basis of any employee in any company is that they help the company make a profit by providing some good or service, which without the work of an employee would not be possible.


Eric.................