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The government shell game that drives voters nuts.

May 2, 2016

The government giveth and it taketh away, often at the same time. This is one of the many frustrations driving the 2016 elections, and it’s about to happen again.

Case in point. Today marks the beginning of Small Business Week.

This the week that the Feds do their annual PR push to convince all of us who actually are small (actually in some cases, micro) businesses that they have our best interests at heart.

In the above-linked USA Today interview between USA Today contributing writer Rhonda Abrams and the current Small Business Administration director, Maria Contreras-Sweet, the director emphasized that the SBA exists to “…level the playing field” for small businesses, cleverly working in one of the buzz phrases of this campaign season.

In the interview,  the director mentions that small businesses are usually not afforded the same incentives, such as tax breaks, zoning variance assistance and the many other sweeteners handed out to large corporate entities.

That’s true, but it isn’t the whole story behind small business success or failure.

This is not meant to suggest that the director didn’t believe everything she said. The SBA, while it is hardly the easy money tree it would have you think it is and is often fraught with regulatory pitfalls for the unwary, still affords access to funds often unavailable from even the most community-minded  banks.

However, while the SBA was touting the agency’s desire to boost small business success, the agency’s counterparts at the Department of Labor (DOL) were busy putting into place the final rule that will increase the payroll costs of almost all businesses with salaried employees making less than $970 a week (up from $455).

For those small businesses (and that can include businesses with up to 500 employees) who are not in the micro-business (and thus exempt) category, that rule is likely to result in a significant increase in labor costs.

Lest anyone accuse this writer of not understanding how businesses can stick it to salaried employees, let me assure you I know all about the Friday night rush assignment that takes 19 uncompensated weekend hours to produce a report due on Monday that the supervisor had known about for three months.

I’ve also been on the other side of the desk. Small businesses tend to operate on razor-thin profit margins. I know that if you have a job bid at a certain amount, and some government agency regulation suddenly doubles your costs in even one area, that job is likely to finish up in the red.

How ironic is it that the SBA is loaning money based on a five year plan that includes a CODB projection, while the DOL is in effect taking that money away with its new regulatons?

The regulations governing overtime for salaried employees are already so complex that many small business owners don’t know if they are compliance or not without hiring a payroll specialist. This new overtime requirement could come as a shock when it goes into effect in September or October.

Sure, there are some legal ways to get around the rules, but by the time you pay someone to figure out what they are, how profitable can you be? On top of local or even statewide increases in the minimum wage, some small businesses may  not survive all this economic leveling of the playing field.

And we wonder why businesses are leaving the U.S?

There are thousands of examples like these lurking in all the federal regulations that each agency has at hand.

When voters and particularly small business voters say the economy and over-regulation are their largest concerns, these are the issues that never get any ink.

Part of the appeal that Donald Trump and Ted Cruz have for voters is their insistence that they will  either close or severely restrain whole departments within the Federal government.

Frankly, there are so many jobs and so much money on the line, it wouldn’t be wise to hold your breath waiting for that to happen on a grand scale.

Still, many believe there is a much  greater chance of constructive change with Trump or even Cruz than there will be with Hillary Clinton, whose entire platform consists of creating even more government control than we have now.

Small business owners would settle for not being the pea under the walnut shell.

From → op-ed

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