3 Small Biz Items on IL Lawmakers’ To-Do Lists
For Illinois, 2015 marks a year of change as Gov. Bruce Rauner takes office. This legislative session is also a pivotal moment for small business owners since lawmakers are facing a number of important issues: minimum wage, the service tax and workers’ compensation reform.
1. Vote Down a Minimum Wage Increase
The minimum wage bill, proposed in early 2014, may come to a vote this year. Senate Bill 68 would increase the mandatory minimum wage from $8.25 to $10.65 in two years. An NFIB study analyzing a 10-year period estimates the measure would reduce private sector employment in the state by more than 45,000 jobs. Of that number, 55 percent of job losses are forecasted to come from small businesses.
Ken Jarosch, owner of Jarosch Bakery in Elk Grove Village, employs a number of workers at the current minimum wage level and fears an increase would negatively impact operations.
“The vast majority of the people in our business that make minimum wage are high school kids,” says Jarosch. “They’re 16; this is their first job. We have to teach them everything. To do that at $10 or $10.65 causes us to look for alternatives to first-job people.”
Jarosch also hires college students during summer and winter breaks. This system allows him to help students gain job experience during their off time while keeping costs low. About 20 percent of his 65-person workforce are minimum wage employees, and they hold mostly customer service jobs. If minimum wage were raised to $10.65, Jarosch’s payroll would increase 5 percent and force him to raise prices up to 3 percent. “Every time we increase prices, even by a few percent, we lose business,” Jarosch says.
2. Ban the Service Tax
Rauner outlined his fiscal agenda in the “Bring Back Blueprint.” The plan proposes a new sales tax on services. NFIB is opposed to the tax, which exempts medical and professional services such as architects, accountants and engineers. Day-to-day businesses, like day care centers and barber shops, would also be excluded. However, other service-based industries, such as Mike Nobis’ LK Creative Printers and Mailers in Quincy, Illinois, are included.
“Most of the customers we deal with [in Illinois] are small businesses and it will be a significant increase in prices to them if this service tax goes into play,” says Nobis. “Right now in the printing industry, we’re only charging tax on materials we’re using to produce the product.”
Many of Nobis’ projects run upwards of $30,000, with raw materials only making up $900 of the sales price. If his customers are forced to pay tax on the entire bill, he may lose business to more competitive markets.
State Rep. Dwight Kay also believes the service tax isn’t the answer to the state’s financial problems.
“We have gone through a failed experiment here in Illinois for the past four years when we increased the income tax on individuals and businesses,” says Kay. “What we saw was the migration of people and businesses, small and large, out of the state of Illinois to neighboring states. I would be reluctant to look at a service tax at this point. There would have to be some very good reasons that would have to be provided to me for justification for doing that.”
3. Overhaul Workers’ Compensation Reform
In 2011, former Gov. Pat Quinn signed legislation that reduced workers’ compensation premiums for some businesses. However, NFIB feels real reform still needs to be passed that dives deeper into the issues burdening business owners.
“Workers’ compensation is about keeping businesses and workers out of court, paying the bills quickly, taking care of workers and putting them back to work,” says Kay. “It’s no longer compensation—it’s become a benefit.”
Small business owner Bill Frerichs, of Frerichs Freightlines in Belleville, feels the lax causation guidelines contribute to its problems.
“I think it should be up to the employee to prove the injury happened while working, instead of the opposite way around,” says Frerichs.
Additionally, he says the choice of doctor plays a large role in the rehabilitation of the employee.
“I had a guy that was out six months with shoulder issues that probably would have been six weeks because he went to his doctor who didn’t care whether he was working or not,” says Frerichs. “It wasn’t until his unemployment benefits got cut that he realized he wasted five months.”
Once the employee went to Frerichs’ doctor, who performed a minor procedure and sent him to rehab, he was able to get back in shape and drive his truck in six weeks.
What small business issues do you want Illinois lawmakers to tackle this session? Tell us in the comments section below.