News Column

Study Focuses On Unemployment in Swing States

Nov. 2, 2012

Staff --

Hudson Institute Chief Economist Tim Kane told that start-up companies drive the U.S. economy and they are currently parked in "wait-and-see" mode.

Kane, a U.S. Air Force Academy graduate who earned his Ph.D. in economics from the University of California, San Diego, noted that, "Start-up companies in their first year of existence account for the majority of new jobs in this country."

Kane, 44, added that the past two years of stagnant growth among start-ups have been difficult for the Obama Administration to countenance with increased demands placed on small businesses by new federal regulatory policies.

"The recovery has not been there for start-ups," Kane told, alluding to a study released this week by the Hudson Institute that shows unemployment rates climbing in key swing-voting states that are critical to Obama's reelection.

"I think unemployment has gone up because the start-up environment has become less favorable," Kane said, pointing to "uncertainty" as the key reason small businesses are reluctant to expand and reinvest.

Kane said he believes Hispanic small-business owners are a critical, if often overlooked, segment of the electoral process, and he pointed to his study as evidence of key states where middle- and upper-class Hispanics could mean the difference between whether Obama is reelected or Mitt Romney occupies the Oval Office come January 2013.

In a Hudson Institute press release, Kane stated, "If voters in the swing states ask themselves if they are better off than they were four years ago, the answer will be no. Comparing official data in 2008 to September 2012 (the latest data available), we see the unemployment rate has increased in every one of the nine most hotly contested swing states. Ohio saw its unemployment rate rise by half a percentage point from 6.5 percent in 2008 to 7.0 percent today, but Nevada suffered more than anywhere with its level rising from 7.0 percent in 2008 to 11.8 percent today."

Swing State Unemployment Rates 2008 to 2012 (Sep) Change%

Nevada: 7.0 to 11.8 +4.8%

Colorado: 4.8 to 8.0 +3.2%

Pennsylvania: 5.4 to 8.2 +2.8%

Wisconsin: 4.8 to 7.3 +2.5%

Florida: 6.3 to 8.7 +2.4%

Virginia: 4.0 to 5.9 +1.9%

Michigan: 8.3 to 9.8 +1.5%

Iowa: 4.0 to 5.2 +1.2%

Ohio: 6.5 to 7.0 +0.5%

To place the economy in perspective, Kane told, "as we approach the concept of 'uncertainty,' as a small-business enterprise I barely understand Obamacare and how healthcare regulations are going to affect small businesses."

Kane explained that the unemployment figures included in his report reflect uncertainty in the business climate of states that rely on policies to help stimulate job growth.

"The United States has not had policies in place that are good for job creators," said Kane, noting that it's a misnomer to assume that entrepreneurs are risk-takers.

"Entrepreneurs are thought to be risky people, but they're not," he said. "They don't like uncertainty, and healthcare costs are big question marks right now."

The added personnel expenses of Obama's healthcare law are causing businesses to "wait and see" how other companies handle those costs, Kane said. For small-business owners, "that extra cost structure over your workforce causes extreme uncertainty."

Turning specifically to Hispanic-owned small businesses, Kane noted that the rate of entrepreneurs among Hispanics is higher in some areas than the general population.

"We're talking about a culture that is very hard working," he said, citing a 33 percent decline in new jobs among minorities. "They're very frustrated right now."

Source: (c) 2012. All rights reserved.

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