NFIB exposed…again

The first time I mentioned Bill Dunkelberg in my blog was two years ago.  Mr. Dunkelberg is the chief economist of the National Federation of Independent Business (NFIB), Professor Emeritus of economics at Temple University and chairman of Liberty Bell Bank in New Jersey. 

Unfortunately, in spite of all those distinguished positions, Mr. Dunkelberg is not a very good prognosticator and certainly not a friend of the nation’s 30 million small businesses.

In 2010 he led the NFIB’s PR campaign against the Small Business Lending Fund the Obama Administration wanted to create in order to encourage community banks to start making small business loans.  Mr. Dunkelberg said that passage of the Lending Fund would lead to “bad loans” that would result in the same kind of financial collapse that resulted from the housing bubble.

Well, the Lending Fund was established and while it has not been a great success in getting banks to meet the demand for small business loans, we also haven’t heard about bad loans threatening the entire financial industry. 

Last week Mr. Dunkelberg’s credentials as a small business advocate for the NFIB were again on display in an interview on WHYY, a Philadelphia public radio station, along with John Arensmeyer, founder and CEO of the Small Business Majority.

Mr. Dunkelberg made it painfully clear who he and the NFIB consider worthy small businesses.  Although there are 30 million small businesses in the country, only 6 million have employees other than the owner according to Mr. Dunkelberg and “those are the ones we worry about” he said.  The other 24 million sole proprietors he dismissed as “little businesses”. 

In Mr. Dunkelberg’s ivory-tower world, almost all the 6 million small-business owners that the NFIB “worries” about would pay higher personal income taxes if the Bush tax cuts end as scheduled for individuals making over $200,000 or joint taxpayers making over $250,000 a year.  Amazingly Mr. Dunkelberg proclaimed, “200-thousand.  250-thousand.  It’s hard to make a lot less than that.”


In a national survey conducted by Lake Research last December for the American Sustainable Business Council, Main Street Alliance and Small Business Majority, only 3% of small businesses with employees other than the owner self-reported family incomes of over $250,000.  That is right in line with all other polling on this issue. 

If Mr. Dunkelberg is so wrong about the incomes of the vast majority of small-business owners, what else is he and the NFIB wrong about?

How about the demand for small business loans?  Since Mr. Dunkelberg is the CEO of a bank he should be an expert on this?

In the radio interview, Mr. Dunkelberg said, “When I talk to all these bankers across the country and also at our bank we find that for the most part that nobody wants more money.  The reason is we have more firms that think the economy will be worse 6 months from now than think it will be better.  We have more firms that think that their real sales will be lower six months from now than it is today.  And we have virtually nobody who thinks it is a good time to expand.”

No small business wants to expand?  No small business needs a loan?  Sounds like a typical bank CEO who listens only to other bankers and wants to sit on his money waiting for the perfect, no-risk small-business loan application.

But at least NFIB’s own survey of its members backs up Mr. Dunkelberg’s opinion.  In May 91% of NFIB members self-reported that they had all the credit they needed.  Only 3% said that financing was their biggest problem. 

However another survey in May by the National Small Business Association found that 43% of its members have wanted loans in recent years but couldn’t get financing.  In June Sam Graves, Republican Chairman of the U.S. House Committee on Small Business wrote, “One of the biggest issues faced by small businesses today is the inability to access sufficient credit and capital.” 

Not only is there demand for small business loans, contrary to Mr. Dunkelberg’s assertion, some small businesses are actually getting the credit they need.  A Gallup poll back in February found that 15% of small businesses were hiring primarily because of the need to expand their business operations and increased consumer demand.  But still not all of even these businesses were getting as much financing as they wanted.  The poll found that one third of the small businesses hiring were adding fewer employees than they needed.

Additionally, the Gallup poll disagrees with Mr. Dunkelberg’s portrayal of small business pessimism.  “Right now, economic confidence is approaching its highest levels in the last four years.  U.S. small-business owners are also about as optimistic about their business and their future hiring as they’ve been at any point during that time,” said Gallup’s chief economist. 

So small businesses are looking for financing, some are expanding and optimism is returning.

All of this means one thing.  Mr. Dunkelberg and the NFIB do not represent most small businesses in this country. 

Maybe the 300 to 350 thousand small businesses the NFIB claims as members consist of all the 3% of small-small business owners that take home over $250,000 a year.  And maybe these NFIB small-business owners don’t need any financing and maybe they are terrible pessimistic. 

But one thing is certain.  They and the NFIB don’t represent the rest of us.  

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