More than 18,000 Colorado small biz jobs at risk under sequestration

More than 956,000 small-business jobs are at risk if the “fiscal cliff” can’t be averted before January 2013.

Of those, about 18,838 are in Colorado, according to an economic report conducted for the Aerospace Industries Association.

The report increases concern that the job losses will be spread among defense contractors and non-defense employers of all sizes starting next year.

The study projected a total loss of 2.14 million American jobs in the event that the Budget Control Act mandates take effect Jan. 2 – the date on which $1.2 trillion in budget cuts start to affect federal programs.

“Further analysis shows that nearly half of all sequestration job losses would come from small businesses,” said Dr. Stephen S. Fuller, Dwight Schar Faculty Chair and director for Regional Analysis at George Mason University, the person who conducted the study. “This is a crucial finding given the importance of small business job creation to the economy and their role as sources of innovation for national defense.”

Fuller’s analysis concludes that approximately 45 percent of all job losses resulting from cuts to DOD and non-DOD programs in the first year of sequestration would come from businesses with 500 or fewer employees.

“At a time when our leaders are calling for policies to help small businesses boost their capacity for job creation, sequestration threatens to drain the economy of a vital source of economic growth and innovation,” said AIA President and CEO Marion C. Blakey. “Clearly, sequestration is not only a concern for prime contractors and international manufacturers. Sequestration has the potential to do equal harm to Main Street and Wall Street.”

 

According to the Small Business Administration, 20 percent of Defense Department prime contracts and 35 percent of DOD subcontracts in 2011 were awarded to small firms. In 2011, 18 percent of NASA prime contracts went to small businesses and 38 percent of its subcontracts to small companies. Additionally, between two-thirds and three-quarters of defense industrial purchases are directed to small suppliers, many of which are the only source of specialty parts and technologies for the U.S. military.

 

The SBA says that small firms employ half of all private sector employees. According the U.S. Census Bureau, small businesses create 90 percent of all new jobs on an annual basis.

“The last thing this country can afford is legislative trickery like automatic sequester cuts that knock the legs out from underneath small and minority businesses that generate 90 percent of new jobs every year,” said Roger A. Campos, president and CEO of the Minority Business Roundtable. “Sequestration budget cuts set to hit in January will destroy a total of over 2 million American jobs, half in smaller businesses. The uncertainty has already caused business owners to stop hiring. It will take bipartisan agreement to repeal sequestration and replace it with a smarter approach to the budget and debt reduction. Let’s not put small businesses on the chopping block.”