Americans Need Jobs, Not Sound Bites; Is Overregulation Preventing Businesses From Hiring?
FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: President Obama attacks success and, therefore, under President Obama we have less success.</s>BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We don't need someone who's a pioneer in offshoring or outsourcing.</s>CHRISTINE ROMANS, HOST (voice-over): Americans don't need sound bites, they need jobs. But what if I told you neither President Obama nor Governor Romney can create a single extra job quickly? The economy is adding jobs but not enough. Nearly 13 million Americans are still looking for work, and many frustrated Americans have simply given up, with those either employed or actively looking hitting a 30- year low. You are demanding answers but your politicians are too busy yelling at each other to hear you.</s>ROMANS: Good morning, everyone, I'm Christine Romans. Politicians create sound bites. These people create jobs. Meet four people with the power to hire. They employ anywhere from nine to 300 workers each: Barry Sloane is the chairman and CEO of Newtek, a small business service company. Rupila Sethi is the founder of Aerial Design and Build, a New York City contractor. Jeffrey Scheininger is president of Flexline. That's a manufacturer. And Don Peebles is chairman and CEO of Peebles Corporation, a real estate developer. OK. Raise your hand if you've created a job any time, let's say, in the last year? There you go. OK. So people who are actually creating jobs. How? Why? Why did you have to create a job?</s>BARRY SLOANE, CHAIRMAN AND CEO, NEWTEK: As we provide funds to small businesses, they create jobs. We've also increased our workforce by about 12 percent over the last year.</s>ROMANS: 12 percent over the last year? So that would sort of defy what we're seeing more broadly in the economy, really. You've been hiring people, I know, because you're actually -- you're getting contracts. Your margins are tight.</s>RUPILA SETHI, FOUNDER, AERIAL DESIGN AND BUILD: Margins are tight.</s>ROMANS: But you hire people, you say, before you actually get the business because you're anticipating demand.</s>SETHI: Absolutely. We've tripled our workforce over the last one year.</s>ROMANS: Tripled your workforce?</s>SETHI: Tripled our workforce. (Inaudible) we've hired one person every two months. And I think we need to hire an extra employee.</s>ROMANS: You are very careful to watch costs, aren't you?</s>SETHI: Yes, we are.</s>ROMNEY: Customers are penny pinching.</s>SETHI: Absolutely. You know, in the past we would see two contractors bidding on one project. But now you have sometimes four to five contractors bidding on one project. And they typically go for the lowest bidder.</s>ROMANS: And Jeff, you're already seeing -- you're a manufacturer, you're already seeing Europe and -- or Europe and China slowing on your business for sure. And you can feel it.</s>JEFFREY SCHEININGER, PRESIDENT, FLEXLINE: Correct, correct. It started about six to eight weeks ago. And we can certainly sense that there's been a change in our economic underpinnings.</s>ROMANS: So what do you do differently? How do you watch the global economy and worry about your own business?</s>SCHEININGER: Well, you know, it's real easy to tell when your orders go down. We're -- as a manufacturer, we're primarily driven exclusively by demand. We do hiring based -- you know, if it's manufacturing based, it's purely demand driven. If demand goes down, there's no hiring.</s>ROMANS: And I know that you, Don, real estate, a lot of people have been saying has been bottoming, commercial real estate and the housing market in general. Do you see a bottom?</s>DON PEEBLES, CHAIRMAN AND CEO, PEEBLES CORPORATION: Yes, I do. I think the housing market and throughout the country is pretty much bottomed out. I think -- and we're seeing tremendous recovery, say, in New York City, in all sectors, especially the super, super high end. You know, we have apartments now in New York City routinely now selling for over $10,000 a square foot, which is an absurd amount of money. Also, what we've seen in our businesses is hospitality is growing. We're seeing occupancy going up higher in our hotels, customers spending more money while they're there on food and beverage and other activities in the hotel. And we also are looking at much more deal flow in our major markets that we operate in, but also cities like Detroit. And so we're hiring people now to look at more of these deals, because we now belief that these deals are going to lead to new development and new construction, which I think will help pull the economy up a bit more, to have new construction activity start taking place. And we're seeing that in markets that we wouldn't have thought of before, again, such as a Detroit, a Washington, D.C., and now Miami. We're looking at new construction in Miami, which, three years ago, was just, you know, basically a cemetery.</s>ROMNEY: All right. And do politicians create jobs? Or, Jeff, do people who run businesses create jobs?</s>SCHEININGER: The difference between my hiring a welder based on my demand and the economic impact of my hiring a welder or a setup man (ph), versus the local town hiring a teacher, is phenomenal, because not just the multiplier effect, but the creation of wealth, the creation of additional revenue, versus the consumption of it.</s>ROMANS: So you're saying the economic benefit of you hiring a welder is bigger than the economic benefit of a new teacher job being created?</s>SCHEININGER: Correct.</s>ROMANS: I think that teachers would argue with you about that.</s>SCHEININGER: Teachers should argue with me about it. If you're unhappy and uncomfortable with teacher, then say bureaucrat. If you're unhappy with that, say, you know, you pick, but the bottom line is, how many people must support that one government hire, as opposed to growing the economic pie?</s>PEEBLES: Well, I think what you're saying is that it's growing organically, that basically it's economic circumstances that dictate you creating a job as opposed to -- there could be stagnant economic activity and the government can create a job. I don't think politicians create jobs at all. I'm a big believer that the government can create an environment for us to do business. And the best way they can create an environment is just give us some basic regulations, be consistent about the regulations, so what the rules of the game are, and get out of our way and let us do business.</s>ROMANS: And can someone here point to me, any of you, can you point to me a tax or a regulation that has prevented you from hiring a worker?</s>PEEBLES: Yes. Actually, right now, we're looking at a deal right now, and the biggest stumbling block is that we have -- it's a major site to develop. The biggest stumbling block is they want us to close before the end of the year. We need to close the first of next year. If we buy this project, there will be a couple hundred new jobs created as a result of this project.</s>ROMANS: And the government wants you to close by the end of the year?</s>PEEBLES: Of course. Well, however, the reason -- no, not the government, it's the seller of the property. And the reason the seller wants us to close is they're convinced capital gains are going to go up next year.</s>ROMANS: I see.</s>PEEBLES: And so, they feel that they're going to -- their taxes are going to go up 10 points. So instead of 15 percent, they see capital gains being 25 percent or worse. So, they -- that uncertainty has made it a deal-breaker. And they've taken the position that they will keep the property themselves and develop it themselves, as opposed to selling it to us. And they would develop it into a use that will create very few jobs, because it will be a residential rental building as opposed to a hotel.</s>ROMANS: So do you all agree that there are taxes and regulations that prevent people from hiring?</s>SCHEININGER: Every single day. I'm informed of another one. Whether it's the local sewer authority promulgating regulations for wastewater that exceeds the local drinking water standard or it's the uncertainty created around taxes. You can't invest in a project or in a piece of equipment that has a three- and five-year economic life if you don't know what the taxes are.</s>ROMANS: More with my panel of job creators coming up next. What's one thing Washington can do to improve conditions for your company? You say do nothing?</s>SCHEININGER: Fix the tax code in terms of letting us know what it's supposed to be over the next few years and then take a breath.