The pandemic impact combined with ever increasing costs
Christopher Carlozzi, State Director of NFIB in Massachusetts, has written an opinion piece that was published on Sunday 9/13 in the Boston Herald. He hopes to bring the small business voice to the public and policymakers. You can read that op-ed below:
A bad situation getting worse for small businesses
Small businesses in Massachusetts will be crucial to the state’s economic recovery. Year after year, these companies have employed nearly half of the state’s workforce, and when it comes to creating new jobs, the smallest firms add the most. They may be small, but side by side they are an economic powerhouse. As small business owners work to recoup losses from the forced shutdowns due to the coronavirus and get employees back to work, they face another imminent financial threat. New costs imposed by the state government could send them back down the rabbit hole.
Throughout this pandemic, most small businesses suffered significant losses in revenue, but the severity of that pain has been harder on some. Owners of amusement businesses like laser tag and roller-skating rinks are still ordered closed. People who arrange events or set up convention booths aren’t getting clients with gathering restrictions in place. Restaurants and retailers are struggling to make a profit with capacity limits. And charter bus companies and travel agencies aren’t getting bookings. Consumers remain hesitant to travel, shop or dine out.
COVID-19 and the resulting job losses led to exponential increases in unemployment claims in Massachusetts, which has been hit harder than most states. The state unemployment trust fund is insolvent and will be $2.5 billion in the red by year-end and $5 billion in debt next year. The Baker administration is borrowing from the federal government to cover ongoing benefits, and states are asking Congress to provide financial relief. But the state requires that massive depletion of the fund to be covered by employers, and that will hit small businesses hard.
As a result, unemployment taxes will rise precipitously next year to start replenishing the fund. A business owner that paid $539 for each employee in 2020 will see that cost rise to $858 next year. And it is expected to go up higher each year after. That’s a steep additional cost for small businesses, which will discourage filling vacant jobs or the creation of new ones in the recovery.
That isn’t the only pending hike in labor costs. In January, small business owners will also see the minimum wage jump to $13.50 per hour and that also means increasing the pay for all hourly workers — even those much higher on the pay scale.
And don’t forget what labor activists referred to as the “most generous” paid family and medical leave plan passed in the nation. That also begins in January, allowing employees to be off for up to 26 weeks. Small businesses are worried whether they can juggle the workload during those long absences as they struggle to resume operations. There are higher costs too, for replacement workers and cross-training existing staff.
The loss of revenue, the added costs of personal protective equipment and continued closures or ongoing restrictions are difficult. Small business owners are doing all they can to stay afloat. But piling on increases in unemployment taxes, wages and other labor costs is too much to bear.
Lawmakers must urgently address these barriers to economic recovery now, because it’s not just small business owners left dangling in the wind, it’s all their employees, employees’ families and the financial future of the state itself.
Christopher Carlozzi is the Massachusetts state director of the National Federation of Independent Business, a small business advocacy association