Small businesses, job creation and Tony Gurley's first ad

Gurley, a Republican candidate for lieutenant governor, says "Small business is where most jobs come from." We take a look at this common political claim.

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Mark Binker

Tony Gurley, a Republican candidate for lieutenant governor, put his first television ad of the primary on the air today and said he plans to keep it there through May. 8. 

The commercial is designed to introduce Gurley to voters and is therefore not exactly ripe for fact checking. Whether Gurley is "tough" and "a conservative" is something up to voters to decide.

At one point, a woman in the commercial looks at the camera and says, "He's been fighting against voter fraud." Gurley, who is a Wake County Commissioner, did vote for a resolution supporting legislative efforts to create a voter ID law. (Whether Voter ID would have much impact on voter fraud is a subject for another post.) 

However, one bit of sound did catch my attention. A young woman in the commercial says the Gurley "knows how to create jobs." Gurley then talks a bit about his experience as a small business owner -- he's a pharmacist. 

"Small business is where most jobs come from," Gurley says in the ad.

Gurley told me that segment is meant to highlight his experience and was not based on a specific report or statistic.

"That's because of my business background and me personally having to sign the front side of paychecks," Gurley said.

Gurley will be one of a number of politicians we'll hear from this year talking about the need to keep government off the backs of small business. While this line has become something of conventional wisdom, is it right?

There are two different viewpoints on this, and they're both worth thinking about when you see this claim.

First off, had Gurley been inclined to seek backup for his claim, there is ample statistical backup. Both the Small Business Administration and Bureau of Labor Statistics have figures that show more than half the jobs created in the United States were created by small businesses.
"Small firms accounted for 65 percent (or 9.8 million) of the 15 million net new jobs created between 1993 and 2009," according to the SBA. The Politifact website rated Virginia Rep. Eric Cantor's claim that small businesses 'create 70 percent of the jobs in America' as true based on similar information."

So can there be a flip side? Yes there can. 

The differences may relate to how companies are classified by size. The new data classifies companies based on their maximum employment during a year. That minimizes how often companies change categories. A ski resort, with a lot of employees in the winter and only a handful in the summer, might be considered a large company based on its peak employment. In the other data, that company would change size every season. There are also minor differences in which workers are included and excluded.

But it turns out the Business Employment Dynamics data is quite similar in one respect. It also shows that the proportion of private sector employees working for large companies has been steadily rising in recent decades. By either set of data, employment levels have risen far more rapidly at larger companies than at smaller ones.
Felix Salmon, an opinion writer with Rueters, and James Surowiecki in the New Yorker have written about this same set of information that suggests big businesses are more efficient job creators. The Associated Press has also weighed in on this issue.

None of this is to say that small businesses are to be ignored or that government policy should not be crafted in order to allow small businesses to thrive. And I don't think you'll find very many politicians arguing that policy ought to favor big businesses over smaller ones. One could well imagine a politician seizing on this information and saying that it's proof government isn't doing enough to help small businesses become big businesses. 

However, all of this does point to the fact that economic reality is a lot more complex than typically reflected in campaign commercials. And that may be worth thinking about as voters see and hear more from candidates. 


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