“I won’t be satisfied until every American who wants a job can find one, and until workers are getting paychecks that actually pay the bills, until families don’t have to choose between buying groceries and buying medicine, between sending their kids to college and being able to retire in some dignity and some respect.” – President Barack Obama.
On September 8th, the US President introduced a job plan popularly known as the American Jobs Act 2011 to spur the American economy from the current economic crises. The economists opine that though the proposal is debatable it is heartening to know that the President is doing his best by laying down the gauntlet to reclaim the trust of those who voted him into the office.
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How Jobs Act can Help Unemployed Youth?
The statistics reveal that youth unemployment is at an all time high and this is hurting the young. It is also worth mentioning that only 25% of the youth were employed. The Jobs Act proposal has come at the right time. As per this act the economists believe that the young graduates with entrepreneurial skills will be able to start their own ventures.
But how? Remember that if you have to start your small business you need funds and the banks are willing to lend, provided you have a good credit history and collateral. However, under this jobs plan, the government is aiming at self-employment which can create employment opportunities for others. Remember that the youth have immense potential and energy to work around the clock to achieve their goals. What they need is the financial backing. As per the plan, the states would establish Self-Employment Assistance (SEA) Programs. The aim of this program is to help the new entrepreneur utilize the unemployment insurance money to fund their small business for the first six months. SEA programs are very active in the states such as Maryland and Arizona and have helped to create jobs by supporting the aspiring entrepreneurs.
SEA programs are more suited for the young entrepreneurs. The reason is they have very few commitments and they can adapt to less expensive lifestyle easily. Not only that the fresh graduates and the youth can make use of the resources such as Income Based Repayment (IBR) (it is a program designed for those with low incomes to repay their education loans). They can also get the much need advice and education from mentorship organizations such as Startup America, Score and many more. It is believed that if the government and the private enterprises work side by side, it will boost the American economy by drastically reducing the unemployment among the youth.
If the American Jobs Act is passed, you will see an upsurge of new generation entrepreneurs and this in turn will lead to an increased employment and economic growth.
Will the Already Established Small Businesses Benefit?
There are mixed reactions from established small business owners. While some are optimistic that the $447 billion stimulus plan will revive the economy there are others who are highly skeptical. If the Jobs Act is passed into a law, then there is a cut in the payroll tax by half and if the small businesses hire new recruits or increase the remuneration of the existing staff then the payroll tax is waived off. In brief, this Act tax benefits the small business owners who are hiring.
However, what about the small business owners who do not need more workers and also are not in the position to hike the salary of the existing employees? To hike the salary you need consistent cash flow. Many small business owners opine that jobs can be created only if their business is expanded. They suggest that incentives should be given to banks that are willing to give loans to creditworthy small businesses.
Many small business owners also showed concern over consumer spending. If the consumers are not willing to open their wallets, there will be no demand in the market for the goods and services. If that becomes the case then there is no reason to hire new workers. While many small business owners are trying to understand the Acts plan, there are many who appreciate this initiative as a whole.
Are the SMB owners willing to take the tax cut and hire? That is something that we need to wait and see.
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