The Small Business Take on Minimum Wage

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Small businesses are oft-times at the center of political debates — whether they’re knockdown drag-out fights, amicable conversations or something in between. One of the reasons small businesses are central to so many issues and why politicians curry their favor is because of how integral they are to our economy.

Small businesses represent 99.7 percent of all employer firms in this country. They pay nearly half of the U.S. private sector payroll and have created two out of every three net new jobs over the past couple decades.

Put simply, small businesses are our economy. Given that it’s still recovering, the economy needs all the help it can get to make it over the proverbial hump and flourish. Small businesses will play a key part in that journey.

Given their importance, politicians should stand up and take notice when small business owners say they strongly support a policy that has and will continue to elicit political fights of the knockdown drag-out variety, such as increasing the minimum wage. The minimum wage is a business issue that impacts a wide swath of small firms, and according to scientific opinion polling Small Business Majority released this week, two-thirds of them support increasing it and adjusting it annually to keep up with the cost of inflation.

Some have claimed that raising the minimum wage would put small firms out of business because they won’t be able to afford to pay their workers more. Our polling found a whopping 85 percent of small businesses across the country already pay their workers more than the minimum wage, though.

“You need to pay workers enough to survive. It’s in your best interest as a company because if you don’t there is nothing tying them to you.” That’s Clifton Broumand, the president of Man and Machine, a specialty computer product business in Landover, Md., who pays his workers more than the minimum wage and supports increasing it. “I want my employees to have the chance to grow and improve here. I want them to want to stay so we don’t have a lot of turnover. And I pay over minimum wage because it’s the right thing to do.”

A minimum wage worker currently brings in just over $15,000 a year, which is significantly lower than it was in the ‘60s. Two-thirds of small businesses polled agree with Clifton Broumand that it’s just not right.

Moral issues and the ability to attract and retain quality employees aside, there’s another reason small businesses support increasing the minimum wage: consumer demand. Putting more money into workers’ pockets doesn’t just benefit the worker; it benefits the business community and our economy, as well. Two-thirds of small business owners agree increasing the minimum wage would make low-income consumers more likely to spend money, driving up demand for small firms’ products. Another 65 percent agree increasing the minimum wage would help decrease pressure on taxpayer-financed government assistance programs that are needed to supplement low wages.

As I mentioned above, this issue has been and will continue to be a political hot potato. Given politicians’ proclivity to bring small businesses into the fray, many lawmakers will likely be invoking our job creators when they discuss this issue. And given the environment in Washington, the debate will likely split along partisan lines. That’s why the political breakdown of Small Business Majority’s polling is so important to note. Of those polled, 46 percent identified as Republican, 35 percent as Democrat and 11 percent as independent.

This shows small businesses don’t make decisions based on politics. They make decisions based on what’s right for their business, what’s right for their communities and what’s right for our economy.

Politicians should follow their lead.

Small business success is the solution to our economic woes

Originally featured in The Hill:

While tax day is behind us, most small business owners have likely filed extensions to let them continue combing through the tax code looking for ways to keep their hard-earned dollars in their own coffers instead of in Uncle Sam’s. Fortunately, there have been some encouraging developments recently in Congress that could significantly impact small businesses.

The Senate passed a small-business friendly budget last month that indicates after months of political wrangling, lawmakers may finally be working on fiscal policies aimed at helping entrepreneurs. Coupled with the small business tax reform plan recently unveiled by Congressman Dave Camp (R-Mich.), we hope these developments are the sign of a new bipartisan consensus that small business success is the solution to our economic blues. Continue reading

Immigration Reform Key to Small Business, Economic Success

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Arnulfo Ventura considers himself one of the lucky ones.

Most people might say hard work had more to do with it than luck, given what he had to do to achieve the success he has today—owning and operating Coba, a successful Mexican beverage company in Los Angeles. The son of Mexican immigrants, whose mother cleaned houses and father served in the Army in Vietnam, worked tirelessly to receive the Pell Grant that enabled him to get his degree from UC Berkeley and MBA from Stanford. He then put that Masters in business to work and started his company—something every single one of the 28 million entrepreneurs in this country will tell you takes tremendous hard work and determination. But this is where Arnulfo’s “luck” came into play.

About 40 percent of Arnulfo’s business school classmates at Stanford were foreign students. Come graduation, nearly all of them tried to stay in this country, many looking to start their own businesses, just like Arnulfo. But they weren’t so lucky. Most were forced to leave because of our nation’s immigration system. Arnulfo, the son of immigrants, got to stay in this country and realize his dream and, in the process, give 10 people jobs and offer Americans a new product.

Sending talented individuals away—individuals who could make meaningful, even groundbreaking contributions to our economy—is just one piece of our broken immigration system that needs to be fixed. It makes no sense to educate talented foreign-born students and force them to leave upon graduation—just when they are about to begin contributing to the economy by working, innovating, starting new businesses and, perhaps, creating new jobs. We need immigration policies that give immigrant entrepreneurs a clear way to navigate opportunities to start and grow a business in this country.

Small Business Majority released opinion polling this week that found the majority of small business owners feel the same way Arnulfo does, and see immigration reform as a crucial rung in the ladder to small business and overall economic success. A sweeping 87 percent of small employers believe our immigration system is broken, and a large majority support comprehensive immigration proposals currently on the table to fix it.

Like Arnulfo, they recognize the need to allow not only more high-skilled workers into this country, but more low-skilled workers, as well. When you look at their labor needs, it makes sense why they feel this way. One in five small business owners who have hired immigrants say it’s because they can’t find enough U.S. citizens to fill jobs.

What’s more, many small employers who have chosen to hire immigrants say one of the biggest challenges they face in using immigrant labor is concern about following the letter of the law: next to differences in language and culture, a combined 41 percent cite concerns about whether they are complying with the law in hiring immigrants and the time and expense involved in verifying legal workers. This underscores why it’s critical to improve our immigration system and make it easier for employers to understand and comply with its requirements.

The current reform proposal being hammered out in the Senate by the bipartisan “Gang of Eight” takes aim at many of these concerns. And small businesses strongly support every component of the plan we asked them about. Eighty-three percent of small employers support increasing the number of visas for legal immigrants who have advanced degrees in science, technology, engineering or mathematics. Another 87 percent support requiring illegal immigrants with no criminal record to register for legal status, pass a background check, learn English, pay a fine and pay taxes. A vast three quarters agree we would be better off if people who are in the country illegally became legal taxpayers, so they pay their fair share and can work toward citizenship in the future. And three in four owners support revamping the guest worker system to create a new worker visa, eventually letting immigrants move beyond temporary status and switch employers to protect themselves against unscrupulous ones.

All these reforms, if passed by Congress, will help small business owners looking to employ immigrants feel more comfortable about their hires, give immigrants who want to become small business owners the opportunity to do so and put much-needed tax dollars into our country’s coffers, helping the economy on the whole.

It’s easy to see why small businesses support comprehensive immigration reform. For small business owners like Arnulfo, for which immigration is near and dear to his heart, it’s clear why he supports reform. However, of the small business owners we polled, 1 in 5 were sons or daughters or immigrants and 1 in 10 were immigrants themselves. That means the majority of small businesses don’t have the tie to this issue Arnulfo has, but still feel strongly that immigration reform is needed for the good of small business and the country.

In essence, small employers believe fixing the system will help them more easily tap into the immigrant labor workforce, make their existing workforces more stable, make them more competitive and help aspiring immigrants become entrepreneurs. Clearly immigration reform is crucial for current and aspiring small business owners’ pathway to success.

John Arensmeyer is the Founder & CEO of Small Business Majority

Setting the record straight on health law’s delayed small business features

John Arensmeyer

John Arensmeyer

This memo was originally issued on April 4, 2013:

The Department of Health and Human Services’ proposal to delay critical requirements for small business health insurance exchanges in some states is a disappointment to Small Business Majority and millions of small businesses. It’s a letdown to small business owners and their employees looking forward to robust, competitive exchanges in 2014. We hope this proposal is recognized as counterproductive and is abandoned.

That said, there’s a tremendous amount of misinformation circulating about what the rule would actually mean. We want to set the record straight.

What the Rule Would Do

The proposed rule would delay two features of small business exchanges in some states until 2015. It would not delay opening of the exchanges themselves. Exchanges will still open Jan. 1, 2014.

The rule would mean that in some states, two features of the exchange won’t be implemented: 1) employee choice and 2) premium aggregation. These are wonky healthcare terms, but the impact their delay would have is fairly straightforward. Stalling employee choice means small employers will have to wait until 2015 to be able to offer workers an array of health plans to choose from. Delaying premium aggregation means an administrative function that would simplify the payment process for employers also won’t be available for a year. The two features are linked—premium aggregation is not needed without employee choice.

The Facts

Exchanges still open; small businesses still have more than one plan option

What the rule would not do—despite a multitude of reports saying otherwise—is strip small businesses of any coverage choice whatsoever, essentially forcing all small business employers and their workers into one health plan.

Indeed, word on the street is that all small businesses that enroll in exchanges will have access to only one plan. Some reports have even gone as far as saying this plan will be government-run. Neither one of these is true.

Multiple private plans still available

Whether the rule is finalized or not, come 2014, two things will be true: there will be a full array of private health plans offered through the small business exchanges, and employers will be able to choose a plan from them. Their employees can then decide whether to enroll in it. This is essentially how the small group market works right now. What the rule means is that employees themselves will not have a menu of plans to choose from until 2015—which is a new benefit the law provides for small businesses.

Only applies to certain states

It’s also important to note the rule requires only states that have federally facilitated exchanges to delay these features a year. Federally facilitated exchanges are those created by the federal government in states that haven’t chosen to create them on their own. The 17 states implementing their own exchanges can still extend employee choice and premium aggregation to their customers starting in 2014. Nearly 40% of small businesses in this country do business in the 17 states implementing their own exchanges. That means there will be employee choice among health plans for those businesses next year—if their states choose to give it to them.

No impact on self-employed

What’s more, delaying this rule does not impact America’s 22 million self-employed individuals, nearly 30% of whom are uninsured. As planned, these entrepreneurs will still be able to purchase insurance through the individual exchanges in 2014—a huge boon to owners who have struggled to purchase affordable insurance for decades.

The Bottom Line

While certainly disappointing, delaying employee choice and premium aggregation is not the end of the world. Starting next year, small employers will still be able to pool their buying power in the exchanges, giving them the kind of clout large businesses currently enjoy. They’ll still get administrative help and, in many places, will have more choices of plans than they currently do. All the original features of exchanges will go into effect in 2015.

Small Business Majority has been talking to real small businesses across the country since the law was passed three years ago. We know they like the features of the exchange that could be delayed, along with other key provisions including: 1) being able to pool their buying power; 2) the Medical Loss Ratio provision requiring insurers to spend 80% of premium dollars on care; 3) the preexisting condition ban; and 4) the small business healthcare tax credit, which in 2014 will only be available to small business owners who purchase coverage through an exchange. Our national opinion polling further underscores their support for these features.

We hope the proposed rule isn’t finalized, because small businesses nationwide are looking forward to employee choice and premium aggregation. Nevertheless, these features will still be in the exchanges in 2015—albeit a year late.