The tech industry, like virtually all other industries, has been hit hard by this year's recession. Is the antidote to a jobless recovery right under our noses? Former Assistant Secretary of Labor and turnaround expert Al Angrisani thinks the cure is in our own backyard.
It's now almost a given. While the nascent economic recovery should build and spread over the next several months, the unemployment rate will continue to rise. Even the Obama Administration expresses little optimism about its ability to get the country back to work anytime soon, repeatedly stating that it expects figures to peak in the second half of next year. And continued high unemployment could easily scuttle the fragile recovery. With a full two-thirds of the economy based on consumer spending, most experts agree that there will be no sustained recovery until Americans are back to work and secure enough to open their wallets again.
But, according to one business/labor expert -- Al Angrisani, former Assistant U.S. Secretary of Labor and CEO of Angrisani Turnarounds, LLC -- a jobless recovery can be avoided. In fact, he says the antidote to jobless recovery is right under our collective nose, in states that have built the kinds of business-friendly economic structures that encourage businesses -- and especially small businesses -- to grow and hire, even in a recession.
"The proof is in those states that already have much lower unemployment rates than the national average of 9.7 percent. Their small-business-friendly environments have made them the exceptions to the rule," he says. Architect of the Job Training and Partnership Act during his tenure in the Reagan Administration, Angrisani has a deep appreciation for the direct link between free enterprise, business-centered solutions and lower unemployment. He compares the Reagan Administration's program of targeted tax credits, targeted job credits and targeted training grants to small business that created 16 million new jobs in the 1980s, with today's looming jobless recovery.
"As I said recently on Fox Business News and CNBC following the release of the August Jobs Report, we're in a secular (long-term) recession that has exposed serious weaknesses across several major industries in America. Unless we specifically deal with these related unemployment issues, this recession is likely to be long and arduous," Angrisani says. "Unfortunately, the Congress and Administration have a blind spot when it comes to instituting free enterprise solutions like those that we employed in the Reagan Administration and some states are using successfully today."
The Proof Is in the States
Based on various criteria, including cost to do business and business friendliness, CNBC and Forbes recently released their lists of the top states for business. Virginia, with its still-thriving IT and tourism industries topped both lists. Currently, the state's unemployment rate stands at 6.9 percent, nearly three percentage points below the national average. What accounts for the continued economic/employment success in The Old Dominion?
"Virginia makes a great effort to assist in the establishment of small businesses, with programs that streamline the startup process and connect entrepreneurs with resources," said Virginia Secretary of Commerce and Trade, Patrick Gottschalk, emphasizing his state's ongoing support of small business in a news release from Governor Tom Kaine's office.
But, as both Forbes and CNBC point out, the state's support of businesses extends far beyond connecting entrepreneurs with resources. For example, overall business costs in Virginia are 9 percent lower than the national average. Additionally, Virginia's legal and regulatory frameworks are among the most business-friendly in the nation, with tax costs the seventh lowest and Workers' Compensation costs 47 percent below the national average.
In CNBC's Business Friendliness category, Virginia is joined in the top five states by Delaware, South Dakota, Indiana and Colorado. All but Indiana (whose workforce has been dramatically impacted by the auto industry crash) have unemployment rates well below the national average. The perfect illustration of the direct relationship between business-friendly solutions and low unemployment is South Dakota, with its almost inconceivably (considering conditions in much of the nation) low rate of 4.9 percent. Here's how business-friendly the state is. It has:
- No Corporate Income Tax
- No Business Inventory Tax
- No Personal Income Tax, married with a low, 4 % State Sales & Use Tax
"These states have proven that it's direct, targeted, support of small businesses-like targeted tax credits, targeted job credits and targeted training grants that will really work to stimulate employment," Angrisani says. "On the other hand, the current Stimulus Bill -- Washington's answer to the economic crisis -- completely ignores small business and free enterprise solutions. I'm afraid that, until Washington learns what states like Virginia and South Dakota have already discovered, the specter of jobless recovery will become all too real."
About Al Angrisani
For more than 20 years, Al Angrisani has been helping troubled and under-performing companies (TUCs) return to good, solid business practices and create wealth for their shareholders. As a result of his most recent engagement at online media company Greenfield Online, the company was sold to Microsoft Corporation for one-half billion dollars. Al Angrisani is author of the book, Win One for the $hareholders, which is based on his proven model for turning around troubled companies and is the tangible result of his decades of experience. For more information go to http://www.albertangrisani.com.