It’s only happened a few times over the past half century. It happened during the tech bubble in 2000, and during the Vietnam War in the late 1960s: The national unemployment rate has fallen below 4 percent.
And now it’s happened again — for the first time this century. The recently released April jobs report shows that the national unemployment rate is 3.9 percent. This is less than half the rate of six years ago. Things are even better in Missouri, where the unemployment rate stands at 3.6 percent.
These impressive unemployment rates are no surprise to small business owners like me. Together, we’ve been aggressively hiring to the point that finding qualified employees is now the biggest hurdle small businesses face, according to several recent polls. In fact, there is such a need for training workers in trades like construction, electrical and welding that vocational training might be the next business boom.
The strong economy is largely to thank for this strong labor market. Economic growth in recent quarters has bumped up against or surpassed 3 percent. And wages are growing at their fastest pace in a decade.
But the driving factor getting the unemployment rate below 4 percent is the recently passed tax cuts, which delivered significant small business tax relief. Small businesses are the nation’s job creators, generating two-thirds of all new jobs. Allowing them to keep substantially more of their earnings has added fuel to the labor market fire.
Specifically, the tax cuts created a new 20-percent tax deduction for small businesses. This allows them to protect one-fifth of their earnings from taxation, effectively lowering the top marginal tax rate on small businesses from 40 percent to 30 percent. With this extra income, small businesses can afford to expand and hire.
Take my small business, the I & I Agency in Kansas City, for example. Before the tax cut, our profit margins were too slim to afford to hire more. But the tax cut has given us the funds we needed to hire in an attempt to grow the business further. We’re hiring new staff as a direct result of the small business tax cut pushed by President Donald Trump.
We are just one of hundreds of businesses around the country expanding, hiring, or raising wages — or a combination of all of these — with our tax cut savings. At the individual level, this means new and better job opportunities. At the broader economic level, this means a lower unemployment rate and higher wages.
Opponents of these tax cuts have claimed that the benefits skew heavily toward the rich. It’s a “make-rich-people-richer tax bill,” said Sen. Claire McCaskill. But in reality, it’s just the opposite: The 20 percent tax deduction phases out for businesses that earn $315,000 or more. As a result, the tax cut is squarely focused on the middle class small businesses that power our economy. Even taking into account the individual tax cuts associated with tax reform, the share of taxes paid by the rich actually increases under the new tax code.
Just because this is the opposite of everything we’ve heard from the media and Democratic politicians doesn’t make it not true. It’s fallen on businesses owners to educate about this contrarian truth in an attempt to protect these tax cut from leading Democrats likeMcCaskill, who indicate they want to repeal them if they retake Congress this fall.
The 3.9 percent unemployment rate is just the latest evidence that the tax cuts and Trump’s agenda are delivering as promised. And because of them, expect to see unemployment rates below four percent a lot more frequently in the future.
Mark Anthony Jones is the co-owner of the I & I Agency in Kansas City and chairman of the Jackson County Republican Committee.