Audacity of Help Blog

The Green Deal: Obamanomics can do more for small business
October 6th, 2009

By John F. Wasik

There’s something glamorous about a couple of bright souls in an American basement or garage. They tinker around a bit, apply their imagination and creativity to a project, and voila, they’re the next Stephen Jobs or Bill Gates, reinventing the way the world works. Are those days over? Can America still foster the culture of innovation that helped it launch the second industrial revolution, land on the moon and seed the information age? Is President Obama’s “Green Deal” going to foster this kind of growth?

Durable small companies that do everything from manufacturing forklift parts to specialty contracting have been creating the bulk of new jobs in recent years. It’s these “high-impact’’ firms that have been generating employment at a surprisingly robust pace over the past decade. As defined by the U.S. Small Business Administration, these companies generally have less than 20 employees, are 25 years old or less and represent about 3 percent of all firms.

Obamanomics3As I discovered in researching my book The Audacity of Help: Obama’s Economic Plan and the Remaking of America, it’s the small shops, factories and firms that are producing new jobs, accounting for 33.5 percent of employment growth for firms of their size from 1994 through 2006. In contrast, during the same period, firms with 500 employees or more accounted for nearly all of the job loss in the U.S. economy. Yet the stimulus plan and budget do little for small businesses; they didn’t get the kind of cheap-credit bailout that the largest mismanaged financial institutions received.

Obama’s stimulus program will benefit specialized contractors in the building trades, alternative power and energy efficiency. While the initial plan will not be a substitute for a comprehensive climate change policy, national green building standards or a renewable energy portfolio mandate (required use of clean energy by a certain date), it will likely seed thousands of businesses and create jobs. Here’s a breakdown of the nearly $42 billion that will be made available:

* $11 billion for smart-grid research and development
* $6.3 billion for energy efficiency and conservation grants
* $6 billion for loan guarantees for electricity generation and renewable projects such as wind and solar (bringing them online and feeding clean power into the grid)
* $5 billion for weatherization assistance (for low-income residents)
* $4.5 billion for making federal buildings more energy efficient
* $3.4 billion for fossil energy research and development (carbon storage and “clean” coal)
* $2.5 billion for energy efficiency and renewable energy research
* $2 billion in grant funding for advanced batteries systems (making them lighter and store more power over time)
* $1 billion for other energy efficiency programs (alternative fuel trucks and buses, smart appliances)

There’s little doubt that the stimulus package will be the largest portion of seed money ever devoted to remaking the economy in a more sustainable mold. Provided the general economy doesn’t collapse, there will be reasons to be optimistic about the green sector. Renewable energy/efficiency industry grew three times faster than the general economy in 2007.

Mostly creating jobs that can’t be outsourced, this employment boom buoys states that have already embraced alternative energy such as California, Oregon, Colorado and Washington. Ironically, the biggest consumer of solar panels is Germany, which has a long-term tax incentive program in place for residents and businesses to buy and install them. Green-collar jobs in the U.S. will never grow substantially without a comprehensive policy that funds a smart grid with net metering, a national renewable energy standard (Al Gore would like to see all electricity generated from renewable sources in 20 years), job training and national building mandates that directs owners to do energy-efficient retrofits.

While the number of new business start-ups (around 600,000 annually) will not be directly effected by the Obama plan, it may spur new growth in companies specializing in creating a green building industry. Even traditional jobs (see below) will flourish if Obamanomics funds a multi-year construction or rehabilitation or maintenance boom.

There’s one other small-business linchpin that the Obama plan leaves out: Cheap and available credit. Small businesses are still being pinched by the credit crunch. They should be able to garner interest-free loans and get the same kind of deals the big banks got during the bailout. It’s also essential that Congress pass a universal, affordable health care plan. Such a national program would immediately make small businesses more productive and profitable.

John F. Wasik, author of Audacity of Help: Obama’s Economic Plan and the Remaking of America (Bloomberg Press), is a personal finance columnist for Bloomberg News and the author of several books. Wasik has won more than 15 awards for consumer journalism including the 2008 Lisagor and several from the National Press Club. He has appeared on such national media as NBC, NPR, and PBS. He lives in Chicago. For more information, visit www.johnwasik.com.

Copyright © 2009 John F.Wasik