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January 15, 2011 07:44 PM UTC

Jobs, Jobs, Jobs

  • 25 Comments
  • by: DavidThi808

Jobs, jobs, jobs! Every politician in Colorado is claiming that they are totally focused on jobs. But then in so many (not all) cases, they fall back on the same tired proposals they present for any problem. So let’s look as what’s really needed.

First off, increasing the number of jobs in this state comes primarily from one source – new companies. (The theory used to be all small companies, but further investigation showed that it is small companies less than 10 years old that provide most jobs.) And of those startups, we need companies that sell outside the state. A new coffee shop is a new company, but it’s a zero sum game because it does not increase the money coming into the state and therefore is offset by a job loss at another coffee shop.

What we’re talking about is companies like mine. Most of our employees are in Colorado but 98% of our sales are to companies outside of Colorado. Over half are outside the United States. We have customers worldwide including in PRC and India. Oh, and as a software company we provide job that pay well, are in a great work environment, and have minimal negative impact on the environment. What’s not to love.

Ok, so what we need to focus on is encouraging more successful startups and helping the existing startups. These startups do not need to be exclusively high-tech, but they do need to be focused on selling worldwide. This is not to say we tell all other business to take a hike. Anything that helps any businesses increase jobs is a good thing. But the focus should be where the new jobs are – and that’s startups.

So what to do? There are actually a number of actions the State can take that will have a significant impact. And while I have split them up by time, I don’t mean wait on some, I mean some will take time to have their impact felt. But we need to start on all of the below immediately.

Immediately

  1. Place quality people in charge of the state agencies. A benchwarmer like Roxy Huber at Department of Revenue negatively impacts every business in the state. And the smaller the business, the greater the impact. An impact that puts resources to extra effort required by the state rather than hiring additional employees.
  2. Require state agencies to give businesses clear specific answers when they ask what they need to do to meet the rules, what tax/fee has to be paid, etc. And the agency lives with that answer for a year. In most cases businesses just want to know what to do and telling them to guess creates an antagonistic relationship that costs money. And again, that is money that would be better used to hire additional employees.
  3. Have state agencies look to Colorado businesses for goods & services. Some agencies are good about this. But others like OIT have an ABC (Anywhere But Colorado) policy when they look to make purchases. If a local company has the best product or solution – aren’t they at least worth a look? I have had 3 companies tell me they have a product that provides the functionality needed for CBMS – but OIT refuses to even look. I don’t think high prices, an out of state address, and lobbyists should be required to do business with the state.
  4. Boulder has a phenomenal program with Tech Stars. It does more than just find 10 companies too, all of the applicants learn a lot from the process. Some of those others also go on to success. It has also built an infrastructure of advisors and consultants that are key to a vibrant start-up community. But we need more. We need this for industries other than software (starting with green energy). And we need these groups throughout the state – at a minimum in every city we have a University in.
  5. Don’t do stupid shit. High-tech workers tend to be libertarian on social issues. Disallowing civil unions sends a message of intolerance which turns people off. Opposing immigration when 1/3 of the people starting high-tech companies are immigrants is a giant flashing Go Away! message to the people we want here creating new companies. Talking about reduced taxes in the present economy is telling people that the quality of life here will continue to degrade.

Medium Term

  1. Quality high-speed broadband everywhere. If three people can create a company and run it out of their house, with a server in their basement to be their face to the world, you’ve dropped the barrier to entry to nil. But for that to work the line has to stay up (Qwest tends to drop connections for a couple of days once a year), it has to be fast (we’re talking 40mbps bi-directional, not 1.5mbps down/364kbps up), and fast everywhere (not just downtown).
  2. Handle sales tax statewide – with a single rate. The present mis-mash of taxing jurisdictions, each with their own laws as to what is taxed and different authorities to report to (yes, over 80) is not workable in a global economy. At present I would advise any company selling online to not locate in Colorado. Or if they do locate here, to not sell to anyone in the state. Get the top 7 cities together, hammer out an agreement on how the state can handle this for all of them, and then invite the other home rule cities to join. If a little town like Ft. Logan opts out – fine they can be a do not sell zone for the world economy and the rest does fine. And by having a single tax rate state-wide, you eliminate the use tax case of buying in one city to use in another.
  3. Eliminate the high overhead taxes. The business personal property tax is the worst – at my company we spend as much calculating it as the amount we pay. If all companies paid the same amount, but didn’t have that overhead, then the state is equally well off and the private sector would have had money to hire another thousand people or so. Replace these taxes with a carbon tax fee.

Long Term

  1. Fully fund SB-191. We have spent months trying to fill 4 full time and 3 paid internship positions. Last week we finally filled one of them. We have high unemployment and yet there is a severe shortage of qualified people to hire. Why? Lack of education. If you had twice as many Computer Science students at C.U., every outstanding student would have an internship offer today and multiple job offers upon graduation. To create this workforce requires first that we fix K-12 so that most children graduate prepared to excel at a good University. SB-191 gives us a means, but we have to implement it, and implement it well.
  2. Adequately fund High Ed, and double its capacity over the next 10 years. This will require a significant investment as we flip from a state contribution headed toward zero to one that makes College very inexpensive for in-state students. And either adds or grows campuses to increase the capacity. But without this, Colorado’s high-tech business community is already limited due to the lack of qualified people to hire. We can’t grow to be a leading economy of tomorrow if we don’t make the investment in Higher Ed – starting now.
  3. Address our crumbling infrastructure. People who work for high-tech companies can work anywhere and are well paid. If their goal was low taxes they would move to Mississippi or Somalia. What they want is to live in a nice place with a quality infrastructure. I’m not saying go overboard like Boulder does, but if we have unsafe bridges, uninspected restaurants, etc. – well a 2nd world infrastructure will get a 2nd world workforce. And pretty mountains don’t make up for being robbed monthly due to reduced police protection.
  4. Address TABOR, Gallagher, Amend 23, etc. This is such a giant interrelated mess that it requires a constitutional convention to clean it up. Take a deep breath and set that in motion. By definition any new constitution will require strong bi-partisan support to pass so the worries about the final product being a left or right-wing wet dream are overblown.
  5. Get rid of sales tax. First off it’s counter-productive because jobs come from people buying stuff. The more they save the lower the demand and the fewer the jobs. Second, it’s got a high overhead for companies that sell services and digital goods world-wide. What you want are taxes that get the state their money with minimal additional cost to the business. Increase income and/or property taxes to compensate.

Governor Ritter put it well in his final interview – we need to have an adult conversation about the fact that providing services requires taxes. And that the economy and quality of jobs we will have in 5, 10, 20 years is directly dependent on the money we invest now. This is not to say that there is only one reasonable conclusion from that conversation – if you’re 60 years old and have no children, then letting the state degrade so with your lower tax rate you can afford an upgrade on your vacations is a logical choice. And for those that do want Colorado to be a leader in the new global economy, while I think the above goals will be uncontroversial, how to accomplish each is a gigantic question where multiple viewpoints should make for a better approach.

But any politician who says “jobs, jobs, jobs” and is not focusing on items like the above – is either duplicitous or does not understand the economy of today (and tomorrow). And to the (hopefully small) GOP component who is saying the answer is lower taxes and reduced regulation – trying to fit your preferences to the situation shows an utter lack of intellectual rigor. The wise person is one who is willing to let the facts trump their beliefs.

Comments

25 thoughts on “Jobs, Jobs, Jobs

  1. I deeply respect Tom’s eco devo knowledge, and much of what David says is what Tom would say. A great example of new companies that export to other states is Vestas.  They’re also in a new industry, green energy.  Why Colorado for Vestas? Infrastructure (rail lines, roads, utilities, schools nearby) and an educated workforce.

    I’d also include new companies that are supplying a new demand, i.e. the cannabis industry. They are asking for clear rules  and guidance.

    For everyone – business personal property tax is a huge pain in the ass.  

    Non-starters – statewide sales tax, addressing TABOR and Gallagher.

    Thanks for the thoughtful post.

      1. I agree that a single state sales tax would make tax collection incredibly easier for businesses, but it just won’t happen. Sales taxes are the major source of revenue for cities and special districts.  What city wants to give up setting their own tax rates? And what about RTD and the SCFD? Multiple sales taxes are not a competitive disadvantage. Even the most business-friendly states have myriad taxing authorities.  

        TABOR – maybe could refine (Ref C), but it’s deeply loved by many Coloradans. Gallagher places the heaviest burden of property taxes on businesses and lowers individual property taxes. Individuals vote, businesses don’t.

        Slow down businesses, yes.  Hurt them?  I’m not convinced.

      2. If you look at the trend over the past 15 years it has been for more cities to go home rule.  They think that they will collect more tax revenue that way.  There have even been moves in the legislature in the past couple of years to let the counties go home rule.  The time to have stopped this was probably in 1935 when the sales tax first came into being.  If the legislature then had include the same language they included in the income tax statutes that forbid the local jurisdictions from having an income tax.  The gene is out of the bottle and I don’t see any way to get her back in the bottle.  This might be something that could be attacked in your constitutional convention, but the home rules would not go down without a serious fight.

          1. (as usual, but I am not that quick).  I’m in the dark about the Amazon sales tax case.  I’ll do some research, and anything you recommend would be appreciated.  Thx!

  2. This will cost Colorado 6,000 middle class jobs while the top execs walk away with millions.

    Muellar’s reign has been to find a way to sell Qwest for basically the debt, destroy the CWA, and walk away with millions. When he was  first hired they permitted his duaghter to use the company jet to commute to high school in California.I knew when that happened that nothing good would be done for the people of Colorado.

    I realize that I’m biased as I was laid off for beiing Jewish (basically, complaining about anti-semitism).

    Nevertheless, one would think that Colorado politicians would have more to say about this new catastrophe for the state. The Nacchio years were basically a rape the public administration, too.

  3. This will cost Colorado 6,000 middle class jobs while the top execs walk away with millions.

    Muellar’s reign has been to find a way to sell Qwest for basically the debt, destroy the CWA, and walk away with millions. When he was  first hired they permitted his duaghter to use the company jet to commute to high school in California.I knew when that happened that nothing good would be done for the people of Colorado.

    I realize that I’m biased as I was laid off for beiing Jewish (basically, complaining about anti-semitism).

    Nevertheless, one would think that Colorado politicians would have more to say about this new catastrophe for the state. The Nacchio years were basically a rape the public administration, too.

    1. I hate Qwest ever since they mistakenly cut off my DSL internet service the day of the big snowstorm in 2007. I was stuck in the house for 3 days with no internet. After three weeks of trying to get them to turn it back on, I gave up and went cable.

      They have to be one of the worst companies I’ve ever done business with.  

  4. 1. Agreed the hodgepodge of local taxes are a nightmare for consumers and business. If we are to have a sales tax, should be statewide, not local, and a revenue share plan to return that lost local income back to the local governments. Only way this could fly politically.

    2. Need a graduated income tax, less reliance on sales tax. But less reliance on property tax too, since this is a tax on wealth, not income. The wealth I’m talking about is the retired couple basically living off SS or small retirement fund/pension, but own their home. They don’t need higher taxes on their homes.  

      1. the sr exemption means tested.  I don’t mind the example you gave of the old couple just getting by on ss, BUT there are a number of sr that are doing just fine thank you and don’t deserve a break just because they are old.

        1. Don’t misconstrue my comment to mean that there shouldn’t be a fair, evenhanded approach towards these tax exemptions when they do come up again. I was just saying that it will be easier to get that one done politically than it will be for, say, the candy and soda sales tax exemptions.

  5. I would suggest that even purely local small businesses are a boost to the economy and hiring if they fill an unmet need. Even a coffee shop need not be zero sum to the economy if it draws new consumer dollars– a niche shop that profits on a high-end product that doesn’t displace the regular morning cuppa, or that serves an expanding population center.  That speaks to lenders dumb enough to float loans to franchisees wanting to open the third Starbucks in a single shopping center. That may not be a state regulatory issue, but as lending standards at big banks receive more scrutiny we may not see so much a tightening of credit, but a surge in loans to actual viable business ventures.

    A statewide sales tax seems to have great potential for a boondoggle. Whatever formula they use to distribute revenues would inevitably be tinkered with endlessly and even if the people in charge weren’t gaming the system, it would be impossible to prove that to those that don’t get the revenue they hoped for. It would be a fight similar to the one that’s been raging for years against the individual property tax fiefdoms of school districts.

  6. The manager is question laid off 5 of 6 people over 40. He’s been cited in cases against people with disabilties, and saw fit to tranfer a man that made openly racist remarks against Muslims. I told Muahammid he didn’t have to put up with it about 2 weeks before they laid me off. Perhaps he did, because Muhammid is gone and the man making the remarks is still there.

    I was told it was due to staff reduction needs, but my productivity, even when ill, was about 150% of average. Within 2 months he replaced my position and transferred in another worker to replace my productivity.

    He has no business supervising, let along managing. The lead worker that regularly referred to Rose Meddical Center as “that Jew hospital” was promoted.

    That’s Qwest for you.

      1. It waives the right to go to the EEOC. Arbitration is still possible. I’m filing a complaint with the ADL and they will review my separation agreement. It would be long and nasty, and possibly costly. That’s why I took the agreement. Nevertheless, I don’t want other Jews, or minorities to have to suffer under that manager’s obvious bigotry.

        I got 9 weeks pay and a prorated bonus  for 9 years of work. I thought that I had resolved most of the issues by asking the director to do diversity training. She made it voluntary, It’s obvious that not everyone took it to heart.

        It was a very hostile environment to work  in once the manager took over. He once pulled me into his office and asked me why I didn’t like Irwin Rommel. A co worker continually inisted that Rommel didn’t join the nazi party in ’34, wasn’t head of the Hitler Youth, wasn’t in charge of Hitler’s military security detail up to 1939, had no knowledge of einsatzgruppen, nor used slave labor in building the Atlantic wall. Basically he wanted me to say that Rommel was a decent human being because when the war was clearly lost he was approached to join the assasination attempt, and declined to participate. Hitler offerred him suicide and his family safety, or court martial, torture, and concentration camps for his family. I told the co worker repeatedly that I disagreed and would prefer not to talk about it.

        An African-American friend told me that it would be like asking him why he didn’t like the grand dragon of the klan.  

        1. Ray

          What I find absolutely insulting is that nothing was done! When the investigator called me I gave specific events that had taken place: dates, people involved, EEOC cases and verdicts, and much much more. I just cannot believe that NO action was taken…

          I feel that it is in your best interest to contact the ADL and see if they will help take action.

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