Why Aren’t We Creating Enough Jobs?

09/08/2011 2:29 pm EST

Focus: MARKETS

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

Part of the problem is statistical miscalculation, says Louis Navellier of Blue Chip Growth in this August exclusive interview with MoneyShow.com, but the bigger issue is that the government isn’t friendly enough to small businesses.

The last unemployment number, the non-farm payroll number, encouraged the market. We only had 117,000 jobs created, but people loved it. What’s going on here?

Well, we have to create at least 200,000 jobs to keep unemployment steady. Obviously, we’re still losing government jobs. A lot of that is that the federal aid has ceased. A lot of it is that property taxes have gone down, and so the municipalities have to cut, and all the state budget issues.

The truth of the matter is the government is not measuring labor properly. Technically, I’m unemployed, and I’ve been unemployed for ten years. Now somehow, I have a firm, I have 40 employees, I pay taxes.

What it is, is, when you’re self-employed like a lot of America is—if you get a salary, a W2, you all of a sudden have all these deductions. Not only will you pay more Social Security and Medicare than you normally would like in my home state of Nevada, there’s a 2% payroll tax.

I remember ten years ago going to the Nevada legislature arguing to be exempted from this. It was me and the pawn shop guy, and they exempted the pawn shop, but they nailed me. So I guess pawn shops were the future of Nevada. So I got mad at my state, and I haven’t paid my Social Security and I get a 1099. I pay the self-employment tax and Medicare and Social Security.

The government is only measuring the W2 jobs. So the truth of the matter is there’s a lot of 1099 jobs out there. I think Congress means well, and I think they added a lot of benefits out there they want employers to pay, but employers pushed back and they went with the temp jobs. They went with the contract jobs.

I remember a lot of union money, and I can tell you a lot of the unions got upset that, like the hotels would bring in a lot of foreigners on temporary work visas…because when you get to a seasonal business, like a hotel by a beach or a ski resort, if they hire an American or an illegal alien, they have to pay unemployment when the season turns down. If they hire the foreigner on temporary work visas, they say, "Hey, thanks for the help, we’ll see you next season."

Yes, I see.

So then we have all the visa restrictions. Why is Microsoft (MSFT) having to keep all these engineers up in Canada, when they can be down here in the United States paying their social safety net like Social Security and Medicare? So I think we have a lot to fix.

We also have to realize that big businesses do not create jobs. They never have created jobs. They outsource like crazy.

Look at GE (GE). They just sent medical imaging to China. Okay, they added some jobs in Louisville and some other places, but you know big companies have never created jobs. So if I’m a policymaker, I basically have to take all those small and medium-sized jobs and listen to them and do what they want.

What they want is less legislation and more tax incentive?

Probably. I think they want to be in a more pro-business environment.

Our president tried. Before the November election, he did accuse the US Chamber of Commerce of being a front for foreign corporations outsourcing jobs. At least after the election, he went and had lunch with them.

Yes, tried to make nice.

Okay, but, you know…you do have for example the National Labor Relations Board asking Boeing (BA) to take 1,000 jobs they created in South Carolina and ship them back to Washington State. That’s open warfare on 22 right-to-work states. Boeing by the way has created 2,000 jobs in Washington State, so they created 3000 net new jobs.

So obviously the non-union jobs they want moved back to the state, and they don’t want to unionize South Carolina jobs because the right-to-work laws apparently don’t keep the NLRB happy. It’s that kind of stuff that’s hurting.

Even Jeff Immelt, when he was in Italy, was complimenting Angela Merkel for her pro-business policies. And mocking our president at the same time, even though he sits on his advisory board.

Yes, I was going to say exactly.

You know, I think it’s unfortunate. I think we just have to change that tone.

We’re in California now. My family homesteaded here. There’s a Navellier Street. We were here a long time ago, OK? I’ve just watched all the businesses flee the state, and it’s really sad.

In this state, we had 20,000 people that used to pay half the state taxes. Then it went to 10,000, it went to 7,000, it’s about 3,500 now. So if I’m governor of California, it’s easy—just find those 3,500 people and kiss their butts.

Paying their taxes.

And make sure that they’re happy, and start to build from there. They really do have to listen.

Congress means well. They try to help people. It’s like in my home state in Nevada now, we had to put in all these new health-insurance programs. We had to add alcohol rehab and drug rehab for a lot of our employees.

Then of course we get hit with the Cadillac tax in 2018, until Harry Reid exempted our entire state. That’s a whole other…

A whole other subject.

Didn’t get my waiver, but Harry did get it for us. So apparently he listened to some of the Nevada businesses. It’s just the tension that didn’t help.

So even somebody like me would like to hire the contract guy or the temp guy, versus the permanent people. I think a lot of the college kids figured that out until they get out of college.

So we’re creating jobs, but nowhere near as fast. I think we just have to basically, if I’m a politician, I want to deal with small to mid size business as well.

We need to be patient.

Yeah, I think we do. We have a demographic problem.

I think we probably have to have more orderly immigration. People have to realize a wealthy immigrant creates a job, or an immigrant with an education creates a job. OK?

If you talk to Siemens (SI), they’ll tell you we don’t have the engineering schools. They have 500 engineering jobs open. We don’t create enough software engineers, so obviously the Microsofts hire them from India and other places.

We have a lot of very talented people around the world that go to our universities and then go back home, and we probably need to keep them here to create some great businesses.

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