As published in the Orange County Register Thursday, November 17, 2016.
What do small business owners really want?
by Tom Scott, NFIB/CA State Executive Director
Politicians aren’t very popular right now. Congress’ approval rating is hovering around 10 percent in many polls. The two presidential nominees are both viewed unfavorably by a majority of voters. As these politicians march toward the polls, they will do everything they can to associate themselves with things Americans still respect. One of those things is small business.
A Gallup poll last year showed that 67 percent of Americans have “a great deal” or “quite a lot” of confidence in small business. This makes small business one of the most popular institutions in the United States today. Only the military has a higher rate of confidence in Gallup’s estimation.
This is why it’s difficult to find a person running for office who doesn’t praise small businesses and encourage entrepreneurship. We know they’re talking about small business. The question is whether they’re listening.
Every four years, the National Federation of Independent Business polls our membership asking them about their problems and priorities. This is a complex study asking business owners to weigh 78 issues on a scale of 1 (a critical problem) to 7 (not a problem). The results of this scale give us a clear picture of the magnitude of the challenges facing small business owners nationally, and the state-specific report gives us useful insight to the challenges small business owners face here in California.
The top concern this year is the high cost of health insurance. Small business owners know that there is still a lot of work to be done to control costs and reduce the headaches associated with trying to provide good care to workers.
Second in the rankings is “unreasonable government regulations.” This is up three positions from the previous survey. When you consider that “federal paperwork” and “state/local paperwork” are also in the top 15 problems, it is evident that small business owners are frustrated with the level of government regulation.
The vast majority of our members operate very small businesses. They have only a few employees and the owner is often the human resources director, accountant and compliance officer all at the same time. Each time the government puts another requirement on them, it is time taken away from running their business and making it more profitable.
The third biggest problem is also directly related to the government: “Federal taxes on business income.” All told, five of the top 10 most serious problems are related to taxes. According to our Index of Small Business Optimism, small business owners’ outlook has still not recovered following the recession. While Wall Street bounced back and corporate earnings soared, small business owners, like many middle-class Americans, still feel like the economy isn’t working for them.
Our typical member files their taxes at the individual rate. Their business income and personal income is taxed together and while the IRS might see them as wealthy, their actual take-home pay is modest. While corporate tax rate reform may help some of our members, only comprehensive reform of both corporate and individual rates can help the entire sector.
The biggest mover in the survey this year is “locating qualified employees,” moving up from 32nd place and into the top 10. Our members tell us all the time that they struggle to find workers with the right skills and qualities.
This result may show that the labor market is tightening, which could be good for workers. However, small businesses who have little room to raise wages or offer more benefits could find themselves struggling to compete for good workers. Small firms may be losing out to big companies.
The small business vote is up for grabs. Small business owners have told us what they need from their elected officials. If those running for office really want their vote they should listen closely and offer real solutions to the big problems.
Tom Scott is the state executive director for NFIB California, which represents 22,000 dues-paying small business members across California.