Tomorrow the U.S. House Committee on Small Business holds a hearing featuring the results of a Gallup poll conducted in October last year. The title of the hearing is The Path to Job Creation but the better title might be The Path to Deceiving Congress.
The issue is the role government regulations play in small business job creation. The GOP mantra this election season is that regulations are hindering job growth and must be eliminated or severely reduced. Last year the House passed numerous bills to do just that. Those bills are now in the Senate where the majority party has a different perspective on regulations and what really is holding back growth in small business—lack of cusumer demand.
The preponderance of polling results last year clearly indicate that the lack of customers is the main reason small businesses have not been able to more vigorously lead us out of the Great Recession as they have in other downturns. But the anti-regulation crowd has been trying to use the recession both to eliminate regulations opposed by big business and as a partisan weapon in this year’s elections.
The hearing tomorrow looks like an effort to elevate the regulations issue for the media and public and force the Senate into taking action on the anti-regulation bills the House has sent it.
This is where the Gallup poll comes into play. According to that poll, 22% of small business owners said that complying with government regulations was the most important problem facing small-business owners today. Gallup’s analysis of this open-ended question (respondents were not given answers to choose from) showed that of all the responses, “regulations” was the number one answer.
I have a Master’s degree in Social Psychology. But familiarity with opinion polling is not needed to bust Gallup on this poll result.
First, using an open-ended question is troubling because the decision of how to categorize each response is subjective. A response might contain mixed messages and thus must be interpreted giving the Gallup employee the final say on what the small business owner really meant in answering the question. At this point the employee’s own biases (or the biases of the employer) come into play throwing the accuracy of the poll results into question. It is interesting to note that this was the only open-ended question apparently used by Gallup in this poll.
Second, Gallup’s reporting of the answers to this question clearly shows an effort to obtain the results they wanted. Here is how Gallup listed the results:
What do you think is the most important problem facing small-business
owners like you today? [OPEN-ENDED]
Complying with government regulations 22%
Consumer confidence 15%
Lack of consumer demand 12%
Lack of credit availability 10%
Poor leadership/Government/President 9%
Cash flow 7%
New healthcare policy 5%
Competition from big business and overseas 4%
Lack of jobs 4%
It is not hard to see that the responses of “consumer confidence” and “lack of jobs” are simply explanations for why there is a “lack of consumer demand”. Combining those responses we find that 31% of small-business owners identified “lack of consumer demand” as their number one response far exceeding “complying with government regulations”.
We can even make the argument that “cash flow” is a problem because of “lack of consumer demand”. That would show 38% of the responses being “lack of consumer demand”.
Third, Gallup only gives us 88% of the responses to this question. Were the remaining answers so nebulous or divergent that they weren’t of value? Shouldn’t the number of these unreported responses alone have told Gallup that the open-ended question was a problem.
So now we know how Gallup was able to report the response to the question the way it did. Now the question is why?
The answer is clear. This was a Wells Fargo/Gallup poll. Wells Fargo and the other big financial giants have been vigorous opponents of the regulations coming from the passage of Dodd/Frank that is designed to protect all of us, including small businesses, from another Great Recession. Only the petroleum/coal industry has been trying harder to turn government regulations into the boogeyman responsible for all the country’s economic problems.
The PR tactic to bash regulations has been to convince Congress and the public that regulations are hurting small businesses. But as previously noted much of the survey work last year on the issue didn’t come to that conclusion. Tomorrow, results of another poll will be released by three national business organizations—American Sustainable Business Council, Main Street Alliance and Small Business Majority—again throwing water on the anti-regulation rhetoric.
It is obvious that Gallup was trying to deliver to its financing partner a response the anti-regulation folks could promote. Hence the hearing tomorrow featuring Dr. Dennis Jacob, Chief Economist of Gallup, who will talk about the poll.
But to Gallup’s credit it did ask another question with structured responses that undermines the result produced for Wells Fargo.
Thinking ahead to 2012, what would be a primary motivation or reason
for hiring and new employees?
When revenues or sales have increased 27%
When the economy improves 20%
If you need to support growth or expansion plans 17%
If you need to replace an employee who left 10%
Having tax credits for hiring unemployed workers 7%
Some other reason 7%
That’s essentially 67% of small-business owners saying “increased consumer demand” will lead to job growth. Maybe the “when regulations are reduced” answer is buried in the “some other reason” response.
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