In business, big and small both matter

Twenty years ago, at a lightly attended legislative meeting in Olympia, a state senator said, “When the big dog dies, the fleas have to find another place to go.”

The subject was the machinery and equipment sales tax exemption. The senator was responding to another member’s observation that the tax break would primarily accrue to larger businesses. (In fact, a lot of small manufacturers also benefit.) While I might have chosen a metaphor that hinted more at parity than parasites, the impolitic comment hit at a larger truth: There is an inextricable connection between small businesses and large corporations.

Nationally, and prominently in our populist state, big business is often lambasted for political advantage, while small businesses enjoy an iconic, sacrosanct status. Last week, President Obama released his latest recovery “to do” list for Congress. Calling for small business tax credits, Obama said, “Small businesses are the engine of economic growth in this country. We shouldn’t be holding them back — we should be making it easier for them to succeed.”

A recent survey of small business owners also runs with the theme.

“Small businesses have been described as the engine driving America’s economy,” says Thumbtack.com, a young web-based business that links customers with service professionals. The firm notes that small businesses provided 65 percent of net new employment between 1993 and 2009 and about half of all private sector jobs.

Certainly small business development is vital, but these “engines of the economy” comments overlook the interdependent connection between large and small employers. Recent research on two of our state’s dominant industries makes the point.

According to University of Washington economist Theo Eicher, Microsoft has been the “single largest contributor to economic growth in Washington” since 1990, accounting for 32.4 percent of the total gain in employment. He calculates that the firm generated $10 billion in operations and expenditures in Washington in 2009. For every Microsoft job, another 5.1 jobs are created in the local economy, for a total employment impact of 252,863 workers.

In 2009 the Washington Research Council, my employer, asked the question: What if Boeing left Washington? The ensuing analysis found that every Boeing job supports another three jobs in the state. With 72,000 direct jobs at the time, the airplane manufacturer accounted for 285,000 total jobs. (Since that study was completed, Boeing employment has climbed and is expected to reach 83,000 this year.)

Many thriving small businesses in our state owe their success to the presence here of corporate leaders like Microsoft and Boeing anchoring dynamic industrial clusters.

Still, those small entrepreneurs operate in a demanding environment, with some unique business challenges stemming from public policy. It’s instructive to consider what matters to them.

With support from the Kauffman Foundation, Thumbtack recently surveyed small businesses listed on its website, gathering more than 7,000 responses. While not a random sample — small businesses were invited to respond by clicking a link on Thumbtack’s web page — the survey results merit some consideration. Perceptions matter.

Small businesses here gave Washington an overall grade of C-minus on overall small business friendliness, ranking us 32nd of 44. (Six states were excluded because not enough respondents filled out the survey.) Idaho, Texas, Oklahoma, Utah and Louisiana were the top five for overall small business friendliness. Vermont, Hawaii, California, New York and Michigan landed on the bottom.

Washington-based respondents gave Washington below average marks on hiring costs, regulation and taxes. Thumbtack reports that small businesses here were the third least healthy nationwide and fourth slowest growing, based on survey responses.

A similar survey from Chief Executive magazine finds that corporate leaders see us much the same way. In the 2012 Best/Worst States for Business rankings, Washington came in at No. 37. The top five states include Texas, Florida, North Carolina, Tennessee and Indiana; California, New York, Illinois, Massachusetts and Michigan again ranked lowest. Key factors influencing the rankings are workforce quality, taxes and regulation, and quality of life — the same things that matter to small businesses.

Expect candidates to lavish a lot of attention on small businesses this year. That’s politics. But if they really want to help them, they will promote an agenda that works for all business, including the big dogs.

Richard S. Davis is president of the Washington Research Council. His email address is rsdavis@simeonpartners.com.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Opinion

toon
Editorial cartoons for Monday, May 19

A sketchy look at the news of the day.… Continue reading

Comment: Cuts to Medicaid will make fentanyl fight harder

Medicaid’s expansion is helping many get the addiction treatment they need, reversing the crisis.

Comment: PBS, NPR need funding, and a good shake-up

PBS’s best dramas come from British TV. It needs to produce its own money-makers like ‘Downton Abbey.’

Saunders: Why did Tapper wait until now to admit Biden’s decline?

It was clear to voters long before Biden dropped out. Yet, now the CNN host has a book to sell.

Wildfire smoke builds over Darrington on Friday, Sept. 11, 2020 in Darrington, Wa. (Olivia Vanni / The Herald)
Editorial: Loss of research funds threat to climate resilience

The Trump administration’s end of a grant for climate research threatens solutions communities need.

Sarah Weiser / The Herald
Air Force One touches ground Friday morning at Boeing in Everett.
PHOTO SHOT 02172012
Editorial: There’s no free lunch and no free Air Force One

Qatar’s offer of a 747 to President Trump solves nothing and leaves the nation beholden.

The Washington State Legislature convenes for a joint session for a swearing-in ceremony of statewide elected officials and Governor Bob Ferguson’s inaugural address, March 15, 2025.
Editorial: 4 bills that need a second look by state lawmakers

Even good ideas, such as these four bills, can fail to gain traction in the state Legislature.

Goldberg: How did so many Democrats miss Biden’s infirmity?

Democrats need to own up to the cover-up now while there’s time to earn back voters’ confidence.

In the summer of 2021, members of the Skagit River System Cooperative counted fish in the restored estuary of Leque Island near Stanwood. What they found was encouraging. (Chuck Taylor / The Herald) 20210817
Comment: Ignoring the climate choice to adapt or die

The loss of funding for climate adaptation science will leave regions to weather impacts on their own.

Reverse Congress librarian’s unjust firing

I am beyond heartbroken by the unceremonious firing of Dr. Carla Hayden,… Continue reading

Should states handle issue of immigration?

OK, here we go again. The southern states have been screaming ‘states’… Continue reading

Candidates without opponents should decline donations

No candidates registered to run against Jared Mead or Nate Nehring for… Continue reading

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.