Entrepreneurs and their advocates were glad to hear President Barack Obama’s commitment to solving the nation’s impending debt and spending crisis, simplifying the tax code and overhauling immigration laws in his State of the Union Address Tuesday night. More controversial was his proposal to raise federal minimum wage to $9 per hour for full-time employees.
Such an increase, particularly for small-business owners in the service industry who depend on low-skilled labor, would combine with the imminent implementation of Obamacare to make each employee more expensive, says Pamela Springer, the CEO of Manta, an online small-business community, in an email to Entrepreneur.com. “New healthcare costs and a potential of an increased hourly rate, only creates headwind for taking on more risks,” Springer says.
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National Federation of Independent Business chief economist William Dunkelberg called the minimum wage an “anti-jobs policy” in a piece he penned for Forbes. Without a parallel increase in the strength of the economy, some small businesses will be forced to eliminate jobs if the minimum wage increases, says business owner Sam Caucci, the founder of New York City-based sports consulting group Sales Huddle Group.
Meanwhile, small-business owners on a conference call with reporters organized by the Washington, D.C.-based National Small Business Association after the speech, seemed to take the proposed hike to the federal minimum wage in stride. Dave Koch, a Culver’s restaurant franchise owner from Rockford, Ill., says the possibility isn't big concern for him. As long as part-time employees are not included in the minimum-wage increase and an exception is allowed for what are called “inexperienced” workers, like high-school students, Koch’s business would not be dramatically hurt by the change. The minimum wage in Illinois is $8.25 per hour, according to the Bureau of Labor Statistics.
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Some small-business advocates were also disappointed that the President didn’t spotlight small business more directly. The thrust of the speech was giving all workers a fair shake and supporting the middle class. Florida Senator and Republican 2016 presidential hopeful Marco Rubio’s rebuttal centered on traditional conservative themes of the benefits of free enterprise and minimal governmental interference.
Here's what the president said that was popular with small-business owners and advocates:
- The federal debt: One of Obama’s first points in his speech, delivered to both Houses of Congress, was to call together Democrats and Republicans to put an end to the possibility of a federal debt crisis by coming up with a compromise plan to reduce the deficit. Business owners are uneasy watching the federal debt balloon, and their anxiety is rising with the possibility of automatic federal spending cuts set to go into effect March 1. Called the "sequester," these arbitrary and immediate spending cuts threaten to stall the economy if Congress does not act to stop it. “The greatest nation on earth cannot keep conducting its business by drifting from one manufactured crisis to the next,” Obama said to applause.
- Tax reform: Obama called for a comprehensive overhaul of the tax system. He specifically mentioned the need to create a process that would require less time for small-business owners to fill out complex tax forms. Across the board, representatives of the small-business community cheered.
- Immigration reform: Obama called on Congress to pass legislation that would decrease the waiting time to help these immigrants enter the U.S., stay and work. Immigration reform is one of only a few issues that has received bipartisan support in Washington lately and is of particular interest to technology startups, constantly hungry for high-skilled labor to grow. Steve Case, the founder of AOL and a vocal champion of the immigration debate, says it is a very encouraging sign that both Obama and Rubio talked about the need to reform the current immigration policy.
- Investment in innovation: Obama talked about the need to invest in innovative technology, infrastructure and clean energy to make the U.S. globally competitive over the longer term. Support for clean-energy and manufacturing innovation was particularly positive, says John Arensmeyer, the CEO of the Small Business Majority, a national small-business advocacy group.
One notable sour note for business owners was the omission of any mention of helping clarify the implementation of the Affordable Care Act, according to Arensmeyer. Also absent was a discussion of how to help small businesses gain access to capital, said John Phelps, executive director of Rockford, Ill.-based economic-development company Rockford Local Development Corp. on the NSBA call.
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What were you particularly glad to hear Obama talk about in the State of the Union address? What was missing? Leave a note below and let us know.