“Unchanged” Diagnosis for Ailing Economy

The first six words of the Labor Department’s June report on jobs says it all – “Nonfarm payroll employment was essentially unchanged. . .”  More than 14 million Americans are unemployed.  Of these, 6.3 million are classified as long-term unemployed.  More than a half million Americans have lost their jobs since March.  Add to the 14 million an additional 8.6 million Americans who are classified as “part-time for economic reasons”.  These are American workers whose hours have been cut  or who are working part-time because they have been unable to find full-time work.  And in each section of the report, the code words are “unchanged”, “no improvement”, “essentially flat”. 

Many years ago, Senator Jennings Randolph told the story of his first meeting as a young congressman with President Franklin Roosevelt.  During the depths of the Great Depression, President Roosevelt called a meeting in the White House of Congressional leaders, business leaders, scientists and educators.  His first words were, “Gentlemen, we must act, the time for debate is over.  We must act now.”

IFA leaders have urged congressional leaders and administration officials to take such action on three fronts.  First, examine recently imposed financial regulations that are restricting the flow of capital to small businesses.    House Small Business Committee Chairman Sam Graves (R-MO) agreed with IFA, saying that forcing banks to keep more capital in reserve has stifled borrowing.   ‘We’ve got to untie the hands of these lending institutions,’ Graves said. ‘It’s ridiculous what you have to jump through.’”

Second, IFA has urged Congress to increase support for the SBA 7(a) loan program.  At the current pace, the 7(a) program will hit its $17.5 billion authorization cap before Sept. 30.  IFA leaders have urged Congress to increase the 7(a) lending authorization limit to $19 billion before it leaves town for its August recess.

Third, IFA leaders have called on Congress and the Treasury department to redirect a portion of the $30 billion Small Business Lending Fund to support an expanded loan program for small businesses.   Only a fraction of the fund has been distributed and many community banks have expressed no interest in receiving funds due to the governmental red tape.

Franchisors and franchisees understand that “unchanged” is not a winning strategy.  Businesses must grow and expand, adding new products and services, to win more customers.  A greater sense of urgency and a call to action by both government and business leaders is needed to “change” our ailing economy for the better.     

Posted by John Reynolds, President, IFA Educational Foundation