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Source link: http://archive.mises.org/16806/making-it-tough-to-create-jobs/

Making it Tough to Create Jobs

May 5, 2011 by

There’s a struggle that goes on everyday across America.  While what Washington does makes headlines, entrepreneurs are tangling with municipalities all over the country:  Building departments, licensing, code enforcement, departments of inspections and permits; the list goes on and on.

Most of the time these struggles don’t make news.  Many would-be business owners just give up, some tough it out if they have the patience and resources, while others hire former local politicians who provide the service of ‘greasing the skids downtown’ and call it business consulting.

For those that wonder about the divergent economic worlds we live in: Wall Street’s prosperity and Main Street’s depression, Timothy Aeppel’s Wall Street Journal story about the trials and tribulations of Chesapeake Bay Candle provides a glimpse as to why so many millions are unemployed.

Mei Xu and David Wang sell candles to places like Kohl’s and Target.  During the past 16 years they’ve been shipping candles from their three factories in Asia.  But times have changed.  “To do well in this market, you need to be able to produce and ship the next day,”  Ms. Xu told the WSJ.  “That means making it here.”

Plus, the cost of labor and transportation has soared in Asia.

The U.S. plant will employ 100 people, and more than a year ago the company bought a former liquor warehouse outside of Baltimore, thinking they would be open in nine months.  But it’s 13 months and counting. Xu and Wang have already spent $1 million more than planned and they don’t yet have an occupancy permit.

The storage room Wang and Xu budgeted to cost $25,000, would have cost $250,000 to comply with the city’s requirements, so the company will not store as many fragrance oils on site, making it more difficult to meet orders.

The building has to be equipped with fire sprinklers and handicapped restrooms.  In total, code compliance is estimated to be 30% of the $3.5 million the company has spent on the plant.

A spokeswoman for Anne Ardundel County claims they jumped right on the candle maker’s applications, saying it was the company that was slow to respond after the county objected to the plant’s design.

However if the county essentially tears up your plans, it takes time to respond.  In this case it was six weeks.

Ms. Xu is wisely taking the high road, not blaming county officials.  She doesn’t need anymore delays and the Certificate of Occupancy that will allow her to open and hire workers looks to be close at hand.

The experience has made Ms. Xu wonder if government is “really ready for business to come back from Asia.”

{ 14 comments }

Bogart May 5, 2011 at 10:41 am

A customer of mine had to build a walking bridge over their equipment and conveyors for exit demanded by the fire marshal. Funny thing is that in a fire the last place I would go would be to a higher point when the conveyor system is 1.5 feet above the ground.

Angie May 5, 2011 at 12:04 pm

Seems like the small businesses would be best off to sell their products and services to the federal government. The rest of America may be broke but the government is still spending money.

HL May 5, 2011 at 12:11 pm

Par for the course. Most city officials are fairly mindless bureaucrats who are either oblivious to the genuine harm they cause or knowingly evil in the sense they don’t mind crushing dreams and prosperity.

Why did these folks choose Maryland? Of all the states on the east coast, MD is second only to New Jersey for sheer third-world-ism.

Horst Muhlmann May 5, 2011 at 12:44 pm

Especially when Baltimore is only 30 miles away from the PA border. Not saying PA is any great shakes, but MD makes it look like Hong Kong.

Andrew_M_Garland May 5, 2011 at 12:30 pm

The current excuse for government failure is that unpatriotic, cutthroat businessmen are outsourcing jobs to India and China.

In reality a job outsourced to China is no worse than moving a job to another US state or city. Those other people take the dollars they earn and spend them on something else in the US economy. The pattern of employment changes, but not overall production and spending demand.

Consider that an outsourced job was first created in the US by an eager entrepreneur. Why did he decide to reorganize his business? Probably because he was regulated and harassed.

Jobs never created in the US or in a particular state are a worse problem than outsourced jobs. They never appeared, so there is no visible loss to complain about.

The problem for the United States is not that the Chinese and others are supplying inexpensive goods to us. The problem is that we are preventing and suppressing business development in the US that would employ people to produce many things that we would like. We don’t need to limit trade, we need to free ourselves from suffocating government restrictions on being productive.

Selling us what we won’t make ourselves

WillHarper May 7, 2011 at 1:10 pm

Do you actually think about what you write? “Pattern of employment changes, but not production and spending?” Outsourcing jobs has hamstrung the middle class and every politician with a brain knows this, though they won’t admit it. Wages are down, real income is down for everyone except the top tier. We are bouncing off of nearly ten percent unemployment, and that is using the skewed govt figures that don’t include those who have lost full time jobs and accepted part time or those that have given up. There’s a reason there are so many public sector jobs. There has to be to make up for all the loss in the private sector. Consumption drives 70% of the US economy. Why? Because our production based economy was scuttled by profit seeking corporations seeking cheap labor. Now all of it has come home to roost. Our standard of living is already dropping.

Bruce Koerber May 5, 2011 at 4:02 pm

All Economic Regulations Are Immoral.

There is absolutely no moral authority for any economic intervention and so every one of these bureaucrats and every one of these regulations are corruptions, immoral in essence, and their fruit can only be rotten!

HL May 5, 2011 at 5:02 pm

Amen!

Dan May 5, 2011 at 10:08 pm

I’ll second that!!!

Gary Lee May 7, 2011 at 12:09 pm

Looks like the people planning this plant maybe low-balled their estimates. Or there may be incredibly low safety standards across the waves….. Imagine: a factory that makes candles; inadequate safety and other government mandated measures; highly flammable paraffin wax. The mind boogles at the possible tragedy. Oh, and even the meanest fast-food resturant has handicapped restrooms these days….

Teresa May 7, 2011 at 1:39 pm

I agree with Gary Lee. Yes, we want more jobs, but at what cost? Are we going to give up safety, clean air and water for a few hundred low income jobs? We always look at the number of jobs, but we never consider how much those jobs are paying. Are they really family-wage jobs or are they more minimum wage jobs where employees must apply for food stamps to feed their children? We need more thinkers and fewer reactionaries.

Dan May 7, 2011 at 1:54 pm

Right, more “thinkers” such as yourself who will continue building up the un-ending, nearly impossible to comprehend, let alone navigate, web of regulations that keep us “safe”. God knows where the American public would be without federal bureaucrats who know nothing about business watching over their shoulder, keeping them in line. The same people who can’t even run an office or department that breaks even, naturally will just “know” what needs to be done to keep people safe.

“Imagine: a factory that makes candles; inadequate safety and other government mandated measures; highly flammable paraffin wax. The mind boogles at the possible tragedy.”

Why imagine when you have examples of bureaucrats saving people’s lives from evil factory owners! Remember the Chernobyl incident? Thank God the government was their save everyone!

http://en.wikipedia.org/wiki/Deaths_due_to_the_Chernobyl_disaster

Jason May 8, 2011 at 11:07 am

You are right, Dan. We don’t need to imagine what the world would be like without fire and safety codes. Our ancestors lived in that world. They had good reason to create the codes. Personally I don’t want to go back to a world without them.

http://en.wikipedia.org/wiki/Triangle_fire
http://en.wikipedia.org/wiki/Great_fire

Note how common great city fires were in the US and other G7 countries before 1920. Also note the increadible rise in business and living standards in the West since 1920. History tells us that fire codes and the government employees that enforce them have hardly been a hindrance to the growth of American business and has surely safed the lives of many, many Americans.

Perhaps the real lesson of this story is you should do due dilligence when opening a business or starting a construction project. Ms. Xu should have consulted with an architect or the local fire marshall’s office and created a realistic budget and construction plan.

Costard May 8, 2011 at 4:58 pm

Right. Because early 20th century fire control was revolutionized by fire codes. Not the automobile, electricity, urban flight, modern water systems, or a rising standard of living. What history “tells” you is evidently what you are predisposed to hear; but an objective person would look at the decline in growth in major US cities over the latter half of the 20th century to present, and wonder why no one wants to live in these veritable oases.

Coincidentally, municipal codes took their modern shape in the decades following WW2, chiefly the 60′s and 70′s — not in 1920. Right around the time that US manufacturing became “hindered” by something, stalled, and began its steady decline. Since assumptions about correlation and causation seem to be your bag, perhaps you can add these two items together and see what you come up with.

Teresa: isn’t it a little presumptuous for you to decide what jobs, water, air and safety are acceptable to other people? I’m not sure which city you live in. But in mine, the water is execrable, the air quality is poor, jobs are non-existent, and crime is amongst the tops in the nation. Fortunately there is no shortage of (generally employed and well-to-do) martyrs such as yourself, ready to picket Walmart or any council member who mentions the word “redevelopment”. Perhaps they would not find the status quo so ideal, if they were not so fortunate.

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