Election Explainer: Results in Key States and What They Mean for Small Business

Date: November 16, 2022

Victories and defeats for small business across the country

Apart from a small handful of races, the 2022 midterm elections are now in the books. It was a mixed night for Main Street: some states saw great victories while others voted for lawmakers and ballot initiatives that could hurt small businesses. 

“This was a critical election for small business owners, who are already contending with employee shortages and sky-high inflation,” said NFIB Vice President of State Government Relations Tim Goodrich. “While some states elected lawmakers and passed ballot measures that will help Main Street grow, others chose lawmakers and majorities that will push anti-small business agendas.” 

Nationwide, more and more states are electing trifectas in state government, where both houses of the state legislature and the governor’s mansion are all controlled by the same party. Over 40 states now have either a Republican or Democrat trifecta, creating real challenges and opportunities for small businesses in different states.  

For example, Democrats gained seats in both houses of Michigan’s legislature, flipping both the state House of Representatives and Senate away from Republican control for the first time in 40 years. In addition, Gov. Gretchen Whitmer defeated Republican challenger Tudor Dixon, meaning Michigan now has a Democrat trifecta.  

Similarly, in Minnesota, Democrats won control of the state Senate while retaining control of the House of Representatives, and Democrat Governor Tim Walz defeated challenger Scott Jensen.  

Both Michigan and Minnesota have distinguished themselves as pro-labor states under their current governors, and both have now strengthened their mandates. Small business owners in states like Michigan and Minnesota will face challenges such as the fast-food franchise law, repeal of right-to-work laws, paid sick leave mandates, card check, green energy mandates, higher taxes, and the expansion of Medicaid. 

In other states, the story was reversed with Republicans gaining trifectas or even supermajorities. Florida, once considered a purple state, the Republican Party held a trifecta. After Tuesday’s election, the GOP gained enough seats in both houses of the legislature to gain a supermajority, and Republican governor Ron DeSantis won a commanding victory over challenger Charlie Crist. 

In Texas, Republicans already had a trifecta, and they expanded their majority in both houses of the state legislature to give Republicans a supermajority. Greg Abbott retained the governor’s mansion over Democrat challenger Beto O’Rourke, and he enters his third term with a very strong mandate. 

In states like Florida and Texas, NFIB will encourage the small business-friendly state governments reduce business taxes, pursue market-based energy solutions, strengthen or protect right-to-work laws, and reduce the scope of regulations and regulatory agencies. 

Besides Congressional, governor, and state legislature races, many states also posed important ballot questions to their voters. Successful ballot questions often end up on the ballots of other states, meaning statewide laws can quickly spread to the rest of the nation. Here are the results from a few ballot measures of significant interest to small business: 

  • Millionaire’s Tax: Proposition 30 in California would have increased the tax on personal income above $2 million by 1.75%, with the revenue going towards increased subsidies to zero-emission vehicles. NFIB opposed the measure, and 58.6% of Californian voters said no to Prop 30. 
     
    Meanwhile, Question 1 in Massachusetts would institute a graduated income tax that levies a 4% surcharge on all income over $1 million. This includes income from pass-through small businesses like partnerships, limited liability companies, subchapter S-corporations, and sole-proprietorships. NFIB also opposed Question 1, but unlike the similar ballot question in California, Question 1 passed with 52% of the vote.
  • Minimum Wage: In Nebraska, Initiative 433 would raise the state minimum wage gradually from $9 to $15 an hour by 2026. The ballot initiative also calls for annual inflation adjustments. Despite NFIB opposition, Initiative 433 passed with over 60% of the vote. 
     
    Nevada also had a minimum wage ballot initiative, Question 2, which would increase the minimum wage from $9.50 an hour (for employees with health benefits) and $10.50 an hour (for employees without health benefits) to a flat $12 an hour for all employees. It would also remove existing annual inflation adjustments to the minimum wage. Question 2 passed with 55% of the vote.

  • Union Law: Almost 70% of Tennesseans agreed with NFIB when they voted in favor of Question 1 to become a right-to-work state, solidifying the law in the state’s constitution. Right-to-work states guarantee that workers cannot be forced to join a labor union, but instead may choose whether they wish to be a member and pay union dues.  
     
    Meanwhile, Illinois became the first state in the union to pass a constitutional amendment creating the constitutional right for state residents to join a union. Almost 59% of Illinois voters said yes to the NFIB-opposed Amendment 1, which also prohibits the Illinois state government from ever passing a right-to-work law. 

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