Higher Business Expenses Means Higher Unemployment

(Michael Chamberlain/Nevada Business Coalition) – The unemployment rate in Nevada dropped in January but that is hardly good news. The reason for the decline in the rate was due to discouraged people giving up their job searches and leaving the workforce.

So, obviously, what the Silver State needs is to make it more expensive for businesses to hire people and, thus, even less likely these unemployed people will find work. That’s the strategy of a good portion of the Nevada Legislature, along with government unions and their political and media allies. They are looking for ways to increase government spending and raise taxes, increasing costs to the state’s businesses and making the chances of the unemployed finding work even more remote.

Nearly 11,000 unemployed Nevadans simply quit looking for work and left the state’s labor force in January. A good portion of them may have left the state altogether.

Gas prices continue to climb, imposing even greater burdens on businesses, many of whom are struggling every day just to keep their doors open. The impact of rising gas prices is far-reaching, affecting virtually every transaction, sometimes in multiple ways. Costs for producing and delivering materials go up and many transportation, supply and distribution operations are implementing fuel surcharges on their invoices.

These additional costs must be absorbed somewhere along the supply chain. In many cases, retailers and their suppliers are not able to pass these added costs onto their customers. Consumers, families and other end-users are already struggling themselves and may choose to defer or forego purchases because of rising prices.

Piling on even more additional costs by increasing taxes would further multiply these effects. Consumers would be even less able, and willing, to make purchases forcing companies to cut back on their expenses – reducing wages and benefits and cutting back even further on jobs – just to survive.

Nevadans realize that raising taxes is not going to help the unemployed get hired. In the recent Retail Association of Nevada (RAN) poll, 61% of those surveyed believed that increasing taxes would cause even greater job losses. Yet the inclination of some, many of whom have a stake in increasing the size and power of government, is to ignore this reality and continue to try to squeeze even more out of the businesses and families who have already suffered most from the effects of this recession.

As the latest data suggest, Nevada’s economy is far from out of the woods. Contrary to what government unions, big-government politicians and their allies would like you to believe, the catastrophe is imminent not if we hold the line on taxes and cut the size of government; it is more likely if we don’t.

(Michael Chamberlain is Executive Director of Nevada Business Coalition.)