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News and advice from our small-business Web site

Getting Squeezed out

Small businesses are having a tougher time snagging government contracts, say Democrats on the House Small Business Committee, with minority- and women- owned companies getting hit hardest. The legislators released a study that looked at contracting at 21 federal agencies. It found that the number of federal contracts awarded to small businesses dropped by 23% from 1997 to 1999, from 6.4 million to 4.9 million. In 1999, government agencies spent more than $189 billion and awarded more than 10 million contracts.

The report also gave agencies a letter grade--A through F--for their small-business contracting efforts. More than half of federal agencies received failing or below-average grades. Among the losers: the U.S. Energy Dept., with the only F, and the Education Dept., with a D-. The Small Business Administration earned a C.

More Than Salary

About 25% of each dollar small business spends on compensation pays for benefits, says the Bureau of Labor Statistics, which just published its annual report on employer costs for staff compensation.

On average, companies with fewer than 100 employees offer pay of $12.95 an hour and total compensation of $17.16 an hour. The difference--$4.21--goes to benefit costs. Government eats up the biggest chunk of benefits costs, with $1.53 going to programs such as Social Security, workers' compensation, and unemployment insurance. Then there's vacation and paid leave (92 cents); health, disability, and other insurance (89 cents); supplemental pay (47 cents); and retirement and other savings programs (40 cents).

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