Marketplace Today Blog

By Joe Taschler
Milwaukee Journal Sentinel

Don’t look for a burst of hiring by small businesses in Wisconsin as a result of the federal jobs bill signed into law on Thursday.

A number of small-business owners in the state say they make hiring decisions based on the business they generate, not whether they can save nine months’ worth of Social Security payroll taxes per newly hired worker, which is the main feature of the law.

But in an economy that seems stumped about which way it is heading — signs of growth one day are replaced by signs of stagnation the next — every bit of aid that business can get helps, they say, and they plan to take advantage of the new law if they can.

New jobs, though, won’t come in large numbers until there is enough work to justify them.

Small-business executives in southern Wisconsin on Thursday seemed to echo the feelings of Scott Seljan, president of Seljan Co. Inc., a Lake Mills metal and plastics manufacturer. The company employs about 70 people.

“I think it’s a good start and it’s clearly a move in the right direction,” Seljan said of the jobs bill. “We will be hiring certainly before summer.”

But, he said, “the tax break will have absolutely nothing to do with it. We will only bring people on board based on the workload that we have and the backlog that we have.”

Seljan said his company will take advantage of the tax breaks if they apply. Whatever money the company saves would be invested in new equipment, he said. “These days, any assistance that manufacturing can get, we’re going to take it.”

Under the package, businesses that hire anyone who has been out of work for at least 60 days would be exempt from paying the 6.2 percent Social Security payroll tax on that employee through December. Taxpayers would reimburse the Social Security trust fund for the lost revenue.

Employers would get an additional $1,000 credit for each new worker remaining on the job for a full year.

The package also extends a tax break for small businesses that buy new equipment and expands an initiative that helps state and local government pay for transportation and infrastructure projects.

It is paid for during the coming decade partly by cracking down on offshore tax havens, but it would add $13 billion to the national debt in the next three years.

President Obama said small businesses will benefit from the law.

“Many of them are on the fence right now about whether to bring on that extra worker or two, or whether to hire anyone at all,” he said. “This jobs bill should help make their decision that much easier.”

Not everyone is convinced.

“I never did understand this kind of incentive. It’s so small, so marginal, I don’t think it moves the needle much,” said David J. Ward, an economist and president of Northstar Economics in Madison. “Are you going to hire someone if you don’t know how business is going to go and you might have to lay them off? I think you’re going to hire people if you have markets and orders.

“I just don’t see how it’s going to do much.”

At least one business owner said the law shows that elected leaders from both parties are clueless about the needs of small businesses.

“You’re not going to go out and hire because of a relatively minor tax break,” said Jeff Baum, president and CEO of Wisconsin Aviation. “I think it’s very indicative of how our government does not understand how a business operates.”

The company employs about 150 people at locations in Watertown, Juneau and Madison.

“It’s a baby step in the right direction, but it’s not going to cause businesses to go out and hire,” Baum added.

Baum said he has plans to hire workers this year, but the jobs bill “has absolutely nothing to do with it. It’s not going to change anybody’s hiring plans. I’m sure of that.”

Brian Sullivan, owner of Sullivan Manufacturing, a Mequon precision machining company, said the bill might lead to scattered hiring, or at least callbacks of some people who have been laid off.

“If you’ve got somebody laid off and you are starting to pick up, now’s the time to bring one of those guys back, especially if you get an incentive from the government,” he said.

Unfortunately, business conditions remain tough, Sullivan said.

“It’s not what it used to be. Two years ago we were so busy we were running three shifts. … We couldn’t take on a new job if we had to,” he said.

Now the company runs two shifts and has lost some work to companies in India, he said.

The company employs 24 people.

At Strattec Security Corp. in Glendale, “We’ll get some benefit, but it won’t be significant,” Pat Hansen, chief financial officer, said of the jobs bill.

Strattec manufactures locks and keys for cars and trucks and employs about 200 people.

The company laid off workers in early 2009 as auto industry production plunged but rehired workers late in the year and has added several employees this year to replace workers who retired, he said.

But the hiring of most of those workers wouldn’t help Strattec qualify for the tax credits because they were hired before Feb. 3, Hansen said.

John Schlagenhauf, co-owner and chief financial officer at Milwaukee-based Badger Truck Center, said no one is going to make a hire based on a tax rebate.

“If we hired anyone it’s because we were planning on hiring them prior to this,” he said.

He added that a hiring decision would not take into consideration some of the law’s conditions — including that the new hire must have been out of work for at least 60 days.

“You’re still going to go after the best-qualified candidate,” he said. “Because in the long run, they’re going to make you more money than the tax savings.”

Small businesses
• Employ about half of all private-sector employees.
• Pay nearly 45 percent of total U.S. private payroll.
• Have generated 60 to 80 percent of net new jobs annually over the last decade.

Source: U.S. Small Business Administration

Thomas Content of the Journal Sentinel, and The Associated Press contributed to this report.