In election years, Democrats and Republicans talk about small businesses as the epitome of the U.S.’s can-do spirit and the foundation of the nation’s economy, and President Barack Obama and Mitt Romney have seen no reason to deviate from that script. But while the two parties profess to have entrepreneurs’ best interests at heart, flattery is no sure route to winning their votes.
One reason is that small-business owners are not a monolithic interest group, Bloomberg Businessweek reports in its Sept. 17 issue. The proprietor of a neighborhood pizzeria and a small-scale manufacturer don’t have a lot in common. Even some of the associations that represent small businesses stand far apart on issues of importance to their members. Small-business owners do agree on this, though: What’s good for USA Inc. isn’t necessarily good for America & Sons.
“There is always a tendency for lawmakers to think that small businesses are just smaller versions of General Motors, and they’re not,” said Dan Danner, chief executive officer of the National Federation of Independent Business, a right-leaning lobbying group in Washington.
Many policies, including those covering taxes, banking, health care, trade, and the environment, favor big companies and leave Main Street stores and back-street workshops struggling to compete, small-business owners and their advocates argue.
“The politicians all say small business is the economic lifeblood of our country, and then they go and vote against small business,” said Chris Holman, chairman of the Washington-based National Small Business Association.
Richard Eidlin, director of public policy at the left-leaning American Sustainable Business Council in Washington, said he thinks that the deck is stacked against his organization’s 150,000 members, blaming an infatuation with deregulation that began under Ronald Reagan.
“It’s led to a business environment where small companies are disadvantaged and big businesses have the advantage,” he said.
The data support claims that small business has been losing ground. Its share of U.S. nonfarm gross domestic product generated by private companies fell from more than 48 percent in 2002 to around 44 percent in 2010, according to the latest data available from the Small Business Administration.
Home building and other industries with a high concentration of small businesses are taking longer to recover than others, said Kathryn Kobe, senior economist at Economic Consulting Services in Washington.
“What will help them are policies that can get the foreclosure issue resolved,” she said. “We are seeing the start of that because the housing sector has stabilized in the past few months.”
Danner said his 350,000 members want certainty. The inability to predict what will happen to taxes and the future of the 2010 health-care overhaul, popularly known as Obamacare, makes his members nervous, he said.
Kelly Conklin, whose cabinetry business in Bloomfield, New Jersey, offers health coverage to its 11 employees, calls the law “the single most positive and helpful legislation in the past few years for a small business like mine.”
Now, he says, competitors in nearby Pennsylvania will have to pay for health care, too: “The competitive disadvantage I have in New Jersey will be leveled.” He would like New Jersey Governor Chris Christie, a Republican, to hurry up and create a health insurance exchange for his state before the law’s 2014 deadline.
Small business groups take diverging positions on the federal minimum wage, an issue many of their members feel strongly about. Danner’s group, the NFIB, opposes moving off the $7.25 floor that has been in place since 2009.
Bob Keener, a spokesman for Business for Shared Prosperity, a left-leaning Boston-based policy group, said raising the minimum wage is the No. 1 issue for his 4,000 members, many of them business owners and executives. He asks why labor costs shouldn’t go up when other business expenses, such as gasoline, have. “Increasing the minimum wage benefits their businesses because their customers have more money to spend,” he said.
Government subsidies for big companies are a big concern of Eidlin’s American Sustainable Business Council. He would like to see an end to giveaways of such things as broadband spectrum, which aids large telecommunications companies, and price guarantees for ethanol producers, which benefit agribusinesses at the expense of small farmers. “If there’s going to be corporate welfare, you could throw some of that at the small corporations,” he said.
Ending Internet-based businesses’ 20-year moratorium on charging sales tax is the dream of Tom Campbell, owner of the Regulator Bookshop in Durham, North Carolina, which has five full-time and 15 part-time employees. The exemption threatens bookstores like his with extinction, he said: “Every smartphone and laptop gives Amazon a presence in Durham, so they should be paying sales tax.”
Bill Batchelder, president of Bemidji Woolen Mills, founded by his grandfather in Bemidji, Minnesota, just wants government to get out of the way. Batchelder, who has 25 employees and was a delegate to the Republicans’ nominating convention, sells woolen hunting and winter jackets, with a big market in Japan. “There is no subsidy big enough, no tariff large enough, to make people start buying American clothing versus foreign clothing if they are going after price,” he said.
Tom Secor, president of Durable Corp., a Norwalk, Ohio, company that turns recycled tires into floor mats and loading-dock bumpers, said his biggest problem is high taxes that effectively favor larger corporations.
“We can’t afford to buy the preferences, and it’s tough for us to keep track of them,” he said, referring to congressional favors that have larded the tax code with breaks for industry. “Big business is getting the better end of this because they have the money to spend.”
Obama and Romney each mentioned small business at least five times in their convention speeches. They will need to do much more than that to bring Main Street shops and the Fortune 500 under the same big tent.