Small businesses are struggling to grow and create jobs, putting the nation's economic recovery at risk because of ineffective and bureaucratic government programs and the failures of the nation's schools, M&T Bank Corp.'s CEO said Tuesday.
Speaking to more than 250 people at the bank's annual shareholders meeting, Robert G. Wilmers criticized federal policies and congressional inaction for hampering efforts to help small businesses, including the Small Business Administration.
"It is common for our leaders to express their support for America's small businesses," said Wilmers, who also is chairman of Buffalo-based M&T. "Unfortunately, promises in this area often outstrip performance."
M&T would know. With $5.2 billion in small-business loans, M&T says it's the 11th-largest small-business lender in the nation -- the largest when comparing small-business loans with total assets. And it's the sixth-largest lender under SBA programs.
Wilmers also criticized U.S. high schools, including those in upstate cities, for failing to adequately prepare students for further studies, training and careers, especially in fields where jobs are available.
"A sustained economic recovery is neither automatic nor inevitable. Growth will require a qualified workforce," Wilmers said. "Young people must be especially encouraged to consider science, technology, engineering and mathematics courses, which provide the sort of preparation vital to our economy."
As a result of the combination of factors, small businesses have been unable to create enough jobs and unable to find people to fill what they do create.
In response, he said Congress needs to overhaul the SBA's loan programs to free lenders and borrowers from mounds of paperwork, burdensome regulations and redundancy.
"It is important that we not allow an inefficient and poorly designed SBA to frustrate small business and deter potential bank lenders," he said. "If we have to have a Small Business Administration -- and we should -- it must be guided more by common sense than by red tape."
And he called on schools to "do a much better job with instruction in basic skills, to ensure that students graduate and to direct them toward postsecondary education of all kinds."
"We must not fail in such efforts to prepare the next generation of Americans for the jobs we will have to fill if we are to remain strong and prosperous," Wilmers said, citing M&T's participation in the federal Promise Neighborhood program, through the Westminster Community Foundation, which received a $6 million federal grant. "I call on others, in both public and private life, to do their part, as well."
Wilmers, who spoke a day after M&T reported first-quarter earnings of $206 million, or $1.50 per share, did not spend much time addressing the bank's financial performance, which benefited from its acquisition last May of Wilmington Trust.
Instead, Wilmers, one of the most highly regarded bank CEOs in the country and the "dean" of Buffalo's banking community, used the forum to speak about broader economic and political concerns, as he has been known to do for years. As a result, his words are closely watched by many in the community and across the nation, and the bank's meeting is always well attended.
He has previously spoken about the factors that led to the financial crisis and recession, and noted that "many of these factors have been neither addressed nor corrected," so he remains concerned. But this time, he focused on small businesses, which he called a "bulwark of our economy" and "crucial to economic recovery."
"It is a sector whose health and potential for growth merits the attention of economists, policy analysts and the financial services industry," he said, noting that small businesses represent 98 percent of all companies and employ more than 60 million people. But "it's a sector that is in trouble -- and that should be of concern to all of us."
Wilmers said that there are about 5 million fewer jobs today than prior to the recession and that nearly 23 million Americans of working age are either unemployed or underemployed. That's in part because "mature small businesses are not growing or hiring, and start-up businesses are having trouble getting off the ground."
In the 1980s, he said, small businesses created 57 percent of net new private-sector jobs, but that fell to 48 percent in the 1990s, 37 percent in the last decade and 33 percent in the current period. Many established small businesses have cut more jobs than they've added in the last 30 years. And the number of start-up businesses has fallen by 20 percent, from 660,000 annually before the recession to 530,000 in 2011, with each new firm creating fewer jobs.
"Fewer companies are being born today, and they're hiring fewer employees," Wilmers said.
But even if jobs were created, he said, businesses are struggling to fill them with trained workers, which is "a drag on economic growth," particularly in upstate New York.