Job Report Disappoints as Obama Diverts Billions in Small Business Contracts to Corporate Giants, According to the American Small Business League

PETALUMA, Calif.--(BUSINESS WIRE)--The following is a statement by the American Small Business League:

“One of the most important challenges facing the Small Business Administration and the entire Federal government today.”

The Labor Department reported Friday that employers only added 96,000 jobs in August, far fewer than economists projected. This comes as the Obama administration has been diverting billions of dollars in federal small business contracts to large corporations.

Federal data indicates that small businesses are the nation’s chief job creators. According to the U.S. Census Bureau, small businesses create 90 percent of all net new jobs. Data from the U.S. Bureau of Labor Statistics indicates that 98 percent of all American businesses have less than 100 employees. Moreover, the U.S. Census Bureau reports small businesses are responsible for more than 50 percent of GDP and 50.2 percent of private sector employment.

The federal government has a congressionally mandated goal of awarding 23 percent all contract dollars to small businesses. However, the government’s database of federal small business contractors is crowded with names like Raytheon, Lockheed Martin and General Electric. Giant foreign corporations like British Aerospace (BAE), Rolls-Royce and Rosoboronexport are also among firms that received small business contracts.

Because of the diversion of billions of dollars in small business contracts to large firms, the ASBL estimates that legitimate small businesses actually receive less than ten percent of federal contract dollars.

In 2008, President Obama said, “It is time to end the diversion of small business contracts to corporate giants.” Since 2003, a series of federal investigations have uncovered billions of dollars a year in federal contracts intended for small businesses actually going to large businesses.

In Report 5-15, the Small Business Administration Office of Inspector General (SBA IG) referred to the issue as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” The SBA IG has named the issue as the agency’s top management challenge for the last six consecutive years.

“I think the unemployment rate is even much higher than the government is telling us,” said ASBL President Lloyd Chapman. “If you check the Labor Department’s website, you will see that real unemployment, U-6 unemployment, is closer to 15 percent.”