Not Necessarily True

Michael Panzner
updated | Author's Website

Many people would argue that more government intervention — along with more public sector spending and borrowing — is the only answer to our current woes because the private sector is neither willing nor able to help out. But two recent reports suggest that isn’t necessarily true:

“Paying Companies to Hire the Unemployed” (CNNMoney)

Would you donate $6,000 to subsidize someone else’s job?

The WorkPlace, a Connecticut non-profit agency, believes the best way to get the long-term unemployed back into the workforce is by paying companies to hire them.

But instead of turning to the government for the money, the agency is trying something different: asking private companies and citizens to support subsidized jobs.

“In order to get long-term unemployed people a chance to demonstrate they can do the job as well as anybody else, you have to use unusual tools and that’s one of them,” said Joseph Carbone, the agency’s chief executive.

More than three dozen companies, non-profits, foundations and individuals have donated more than $580,000 to fund The WorkPlace’s initiative, called Platform to Employment. The AARP Foundation kicked in another $200,000 to assist the jobless over age 50.

The program is one of the latest efforts aimed at tackling the thorny problem of long-term unemployment. Millions of people have been jobless for months or years in the wake of the Great Recession, and it’s much tougher for them to work their way back into the labor force, particularly if they are older.

“Law Firm’s Free Help for Startups Strikes a Chord” (New Hampshire Business Review)

Who says there’s no such thing as a free launch?

That’s the working tagline for Devine Millimet’s Business Launch Initiative, a unique program started by the Manchester-based law firm at the depths of the recession that helps new businesses incorporate, and offers other advice, at no charge.

Already close to 100 companies have launched through the initiative since it began in 2010, including accounting businesses, two breweries, bakeries, a winery, consulting firms and a farm.

The new business owners walking through the law firm’s doors are “not just the young people — it’s middle-aged people, it’s people who have been outsourced, it’s people who have been retired who want to go into business,” said Steve Cohen, chair of the mergers and acquisitions team at Devine and a co-founder of the initiative. “The stereotypical new business owner — there’s no such thing.”

It’s an historical fact that recessions drive entrepreneurship, and the Great Recession was no different. A 2010 study by the Kauffman Index of Entrepreneurial Activity found that in 2009, entrepreneurial activity in the United States grew to its highest level in 14 years, with 558,000 new businesses created each month on average.

As a lawyer, Cohen has seen firsthand the effect that recessions have on entrepreneurship, having incorporated many businesses during the early 1990s recession and after the dot-com bust.

But, he realized, the Great Recession was different from previous recessions. This time around, people had little or no equity in their homes, had little to borrow against in dried-up 401(k)s, and banks weren’t lending.

“For setting up businesses, whether they be corporations or LLCs, we looked at, what’s the impediment? It’s cash,” said Cohen. “And who wants to spend the money to incorporate as opposed to buying inventory or putting a deposit down on a lease or actually getting into business?”

Any others worth mentioning?

You may also like: