How Healthy Are America’s Small Businesses?

Source: Thinkstock

Source: Thinkstock

Small business is both an important part of the American economy and, increasingly, an important political topic for politicians running for office. The struggle still facing so many small businesses has been a focus recently — with criticism being leveled against Obama, and policy often evaluated for its effects on smaller businesses and those still struggling to make headway in the economic recovery.

Hillary Clinton has put her own two cents in on the difficulties faced by small business, saying in April that small business has “stalled out,” according to the National Review. “I was very surprised to see that when I began to dig into it … it turns out that we are not producing as many small businesses as we use to.” Whatever oomph Clinton’s statement may be lacking, she isn’t wrong about the state of small business. According to the 2013 Kauffman Index of Entrepreneurial Activity, “the rate of business creation declined from 300 out of 100,000 adults in 2012 to 280 out of 100,000 adults in 2013.” This drop is potentially explained by improvement in other areas, but could also be due to a problematic growth environment.

Small business is very important to the U.S. economy. According to USA TODAY, it contributes 63% of new jobs. But it has not been flourishing in recent years, so how policy affects the growth of small business is very important moving forward. It will help open the doors to improving growth opportunities, or it could lead to poorer conditions. Let’s take a graphical look at where small businesses stand on important political issues that affect them. 

Minimum wage

Small businesses are generally supportive of the minimum wage, regardless of what region of the U.S. you focus polling in, according to a study from the American Sustainable Business Council. However, that doesn’t mean there aren’t some concerns with the minimum wage. Some conservatives argue that small business in particular should be excused from these sorts of increases on the minimum wage, especially if elevated at a rate with which struggling businesses can’t contend. But a majority in the ASBC poll say that they believe there would be significant economic advantages, both direct and indirect, to upping the minimum wage from $7.25 — something many states have already done through their own legislatures in absence of national legislation. As shown above, 67% of small business owners polled by the Small Business Majority said that the federal minimum wage should be increased, and 85% of those surveyed said they already payed over $7.25.

Climate change

While the majority of stats offered by ASBC’s report on climate change and small businesses are generally positive concerning working toward environmental policy that will improve climate change outcomes, some of the questions were skewed in that they looked at very specific aspects of change. Regulation of power plants do not necessarily affect the overhead costs of many small businesses, and the 57% in favor of “the biggest carbon emitters” making “the biggest reductions” is clearly going to elicit a more positive answer from some of the smallest carbon emitters.

The concerns voiced about future costs of climate change were quite common, though, with 87% saying that consequences might hurt their business, 53% concerned about higher energy prices, 48% noting power outage possibilities, and 37% voicing health care concerns — for example, health costs linked to things like COPD and air pollution.

Immigration

In a study looking at 300 well-established small businesses in 2013, the National Small Business Association (NSBA) found that identifying and clearing workers wasn’t always a surefire process, with 20% saying they were unsure if they’d ever been given false ID from employees, and 14.8% saying they knew they had been. “As with everything in a small business, they move quickly: 80 percent put new hires to work within one week, making any kind of delay a drain on the business,” stated the report. A study from the Main Street Alliance and the American Sustainable Business Council also backed the position that from a policy perspective, immigration pathways were that led to citizenship rather than more temporary programs were preferred by most respondents.

Health care costs

USA Today reports that Brad Mete of Affinity Resources, a staffing company, claims that it needs an additional $100,000 in funds to handle the health care changes, and he’ll have to hire two extra workers to help contend with this extra work.

Cost is the number one driver of whether or not a small business will offer health insurance,” said NSBA President Todd McCracken, whose organization’s survey released the numbers shown above. “These costs have real-world implications one-third of small businesses held off on hiring a new employee and more than half say they held off on salary increases for employees.” On the other hand, employees are more financially secure with rates of coverage going up in the United States, and those working for smaller companies are certainly vulnerable to the financial burden of unexpected illnesses.

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