Small Business Versus Government Growth By Jan Teague, President/CEO
There was a flurry of e-mails on Wednesday on what it means to have the Democrats run the country. The word "fear" comes to mind for anyone who is in business. What is very hard to discern is how many business owners were hourly workers in the past and have had the courage and strong work ethic to start a business and actually survive. Is their survival questionable now?
That is the big fear. As soon as the new policies start to impact wallets, there will be those who say they simply can't risk all they have accomplished. They will close their businesses before all of their hard earned profits are gone.
I predict that if the Democrats move too quickly at the state and federal levels, many small businesses will simply fold. It won't be that they weren't successful. It will be that they didn't want to do whatever was being proposed. They won't want to be forced to pay and pay and pay for various new requirements and taxes.
I read a story Wednesday by Dick Davis, who writes on taxes and economic development issues. He advocates for policies that encourage new businesses to locate in the state. But the point now is how to keep those businesses we already have. Cities and counties attend annual conferences every year trying to figure out how to attract businesses to their areas. There are so many types of groups trying to figure this out that this conference topic always draws a strong audience. But I suspect that economic development in future years will be about government funding various public improvements, not business growth.
The fear factor raised its head during a teleconference I participated in this week with members of the Food Marketing Institute. John Motley, FMI's senior vice president of Government and Public Affairs, predicted possible negative business impacts from tax reforms expected from the Democrat-controlled Congress. Other challenges could result from a rising minimum wage and proposals to increase the number of guaranteed sick days available to employees, Motley said. Please read the article below for more details regarding the policy shifts expected from the elections this week.
The new leadership believes that it is government that has the answer to the economic problems. As our country goes down this path with government growth funding more and more jobs, it will be increasingly difficult for the private sector to squeeze itself into the economy to a meaningful degree. Take health care as an example. If it were run by government, it would represent over 50 percent of the gross domestic product. Take any other industry, home loans, for example. If government becomes the lender, how will others in the private sector compete?
So is there fear? Yes, I think the fear is very deep. It is about basic freedoms being changed for those who have a business. It is about having fewer job opportunities unless you want to work for government.
It seems to me that one of the most important things that all of our small businesses can do is to educate our newly-elected leaders on how difficult it is to be in business and what it is that each of you does to support your community and employ people in it. Otherwise, there could be a very quick exit of small businesses from the market and a very quick growth of government jobs.
Democract election wins bring business fears
The Obama administration and the Democrat-controlled Congress will work to promote union organizing while making a profit more difficult for businesses, a Food Marketing Institute official predicted this week.
John Motley, FMI's Senior Vice President of Government and Public Affairs, said food safety regulation, especially regarding imported products, was expected to be a favorite topic of the new Congress next year.
"I think the 111th Congress is going to be a food safety Congress," Motley said.
Democrats will hold a 254 to 173 House majority and the Senate majority is expected to be 57-43 or 58-42, depending on late vote counts, Motley said. The new makeup of members will not be as inclined to challenge Barack Obama's legislative agendas as President, Motley said.
"We're going to see a group of lemmings in the House," Motley predicted. He moderated a post-election teleconference this week with FMI members.
Motley predicted the business community's top agenda item would be opposing the Employee Free Choice Act, which would make it easier for unions to organize workplaces. It would remove the secret union election ballot and replace it with a system that would impose a union if a majority of employees checked a card saying they wanted a union.
Motley called the act "the point of the spear" including other anti-business proposals that could follow, including raising the minimum wage, increasing the number of guaranteed sick days for employees and a return to regulating matters regarding workplace ergonomics that are expected to increase company medical expenses.
"There's a huge fear factor out there," Motley said regarding Obama and possible Congressional proposals. "In most cases, the business community is going to disagree with the direction the administration wants to go. We're going to spend a lot of time being on the defensive."
Motley foresees a national health care package (despite the national banking financial aid outlay), shifting tax burdens to higher wage earners and more emphasis on immigration, energy and environmental policies.
Motley's ray of hope, he said, involved persuading moderate Democrats to slow debate on some Obama proposals. Moderates could slow the Employee Free Choice Act enough to persuade the supportive Obama administration to drop it in favor of other priorities, Motley said. Currently unions represent 7 percent of the labor force. If they succeed with their agenda in Congress, membership is predicted to grow to 20 percent to 30 percent. This would increase their political funding and political power across the country. Motley predicted a three-year battle before the fate of this issue is decided.
"This could take a long time and they (Democrats) will never get there," he said.
Motley also noted that Democrat election wins change the Congressional committee structures in ways not helpful to the business community. In short, the ratio of Democrats to Republicans in committee leadership positions will favor Democrats who won seats from Republicans, Motley said.
"It's going to be more and more difficult to change things at the committee level," he said. "The whole system gets tilted rather dramatically."
Holiday shoppers seek practicality, survey shows
Holiday shoppers will be on the hunt for bargains this year and shun impulse buying, a new consumer survey has found.
"Consumer are telling us that practicality is going to be the order of the day," said Philip Rist, vice president of strategy for BIGresearch, which surveyed shoppers in October for the National Retail Federation. The Washington Retail Association participated in a Webinar about the survey this week.
The survey fell the same October week as Congressional votes to approve a financial aid package for financial institutions that were caught in a credit squeeze.
The surveyed found the lowest levels of consumer confidence since the late 1960s, Rist said. But he identified a few bright spots.
The end of the Presidential campaign, which featured $300 million in advertising highlighting a weakening economy, may help encourage consumers to shop again.
"Consumers are not going to be bombarded with messages on how bad the economy is," Rist said.
Falling gasoline prices compared to earlier this year also should boost sales, he said.
"We think that will have a positive effect, especially on lower income shoppers," Rist said.
The NRF forecasts a 2.2 percent increase in consumer spending this holiday season compared with last year. Still, that would be the lowest holiday spending growth rate in six years.
Retailers, therefore, are expected to be offering bargains to lure shoppers to spend, Rist said.
"Pretty much every retailer is going to be a discounter this year," he said. "Consumers know that."
In other retail sales trends: *Debit cards are becoming more popular than credit cards for many shoppers, according to the industry newsletter The Nilson Report. Debit purchases are expected to climb 13 percent this year compared with a 3 percent rise in credit card sales, the newsletter reports. Consumers report preferring debit cards as a good way to limit spending because money spent gets pulled directly out of the bank or other account. *The slowing economy not only is being felt by brick and mortar stores, but Internet sales sites as well. Online retail sales are projected to grow 5 percent to 6 percent this year, down from 19 percent a year ago, according to comScore Inc., a Web research company. Online sales of music, movies and jewelry are down this year, but sales of video games, furniture and appliances are up, the company reported. *Major retailers have begun offering discounts early in the holiday shopping season. As consumers reported the November elections were distracting them from shopping, some merchandise was discounted up to 50 percent at Macy's, 60 percent at Sears and 40 percent to 60 percent at Kohl's stores.
Sources: Business Week, The Atlanta Journal Constitution, National Retail Federation, Cincinnati Business Courier
WRA looks forward to working again with Gregoire
The state Legislature appears headed toward losing one Republican each from the Senate and House of Representatives as a result of Tuesday's elections. Vote counting continued this week in some close races.
Democrat Gov. Christine Gregorian won re-election and her Republican opponent, Dino Rossi, conceded defeat on Wednesday.
If preliminary results hold, party make up in the Senate will be 33 Democrats and 16 Republicans, while it will be 64 Democrats and 34 Republicans in the House.
Democrats have held nearly 2-to-1 majorities in both houses of the Legislature since 2006.
Jan Teague, President/CEO of the Washington Retail Association, said she welcomed working again with Gov. Gregoire.
"We've had a good working relationship with Governor Gregoire and we look forward to working with her again," Teague said.
Hundreds of thousands of votes remained to be counted and some races remained too close to call. There were 124 Legislature races this year including all 98 House seats and 26 of 49 Senate seats.
Study urged of automatic state minimum wage hikes
The negative impacts of Washington state's rising minimum wage must be reviewed and possibly changed by the state Legislature, the President of the Association of Washington Business has urged.
The Washington Retail Association has urged removal of the "annual inflator" in the size of the minimum wage and urged that annual raises not be automatic but placed in the hands of state legislators.
WRA maintains that Washington's minimum wage, the nation's highest, threatens the livelihoods of small businesses that struggle to make a profit and holds down job opportunities because employers increasingly cannot afford to pay the wage.
Voter-approved Initiative 688 in 1998 allowed automatic annual increases in the minimum wage. The state's minimum wage is scheduled to rise from $8.07 to $8.55 in January.
"This fifty cent-an-hour increase is going to increase our labor cost by seven to eight percent next year," AWB President Don Brunell wrote in The Columbian newspaper this week. "The question is whether our state can continue to allow the minimum wage to ratchet upward if the economics don't work for employers."
Source: The Columbian
Voluntary reusable bag program launched in Spokane
The Spokane City Council heard about a plan this week to create a voluntary program to encourage the use of reusable shopping bags.
The Washington Retail Association sent a letter of support to the council and stakeholders on the voluntary program which promotes reusable bags, recycling, education of consumers and cooperation between business and government.
The plan contrasts with a controversial Seattle proposal to tax customers who shop at stores in the city if they use disposable shopping bags at groceries, pharmacies and convenience stores. WRA opposes the Seattle approach.
The voluntary "CHOOSEreusable" campaign is structured as a phased in plan with the goal of achieving a 50 percent reduction in the use of disposable shopping bags within five years. The program seeks a 10 percent annual reduction in disposable bag use.
Meanwhile, opponents of Seattle's proposed 20-cent-per-bag tax collected enough signatures to schedule a 2009 referendum vote, expected in August. The Seattle shopping bag tax had been scheduled to go into effect in January until opponents mounted a signature campaign to attempt to repeal it. The Seattle tax cannot be collected before results of the referendum are known.
WRA considers a mandatory tax to be an unfair financial burden on the many cash-strapped consumers adjusting to the region's slowing economy. The tax would impose unnecessary added business costs to implement and might encourage businesses to locate outside Seattle and consumers to shop outside the city to avoid the tax, WRA believes.
There is consideration of promoting the voluntary program more broadly if it proves popular in Spokane.
Small business forums continue around state
The Washington Policy Center has begun a series of statewide small business forums.
The Washington Retail Association is a co-presenter of the series.
The forums aim to update small business owners on policy changes that affect their business operations. Attendees will hear from WPC research staff, hear a preview of the 2009 Legislative session and discuss how next week's elections could affect them.
The $25 cost includes a meal and forum materials.
The remaining locations include:
*Bellevue, Nov. 12, from 7:30 a.m. to 9:30 a.m., at Bellevue's Red Lion. *Central Washington, Nov. 13, from 7:30 a.m. to 9:30 a.m., at Wenatchee's Red Lion Hotel. Register through Wenatchee Valley Chamber of Commerce. *Tacoma, Nov. 18, from 7:30 a.m. to 9:30 a.m,. at Tacoma's LaQuinta Inn. Register through Tacoma-Pierce County Chamber of Commerce. *Vancouver, Nov. 20, from 11:30 a.m. to 1:30 p.m., at Red Lion at the Quay.
Shippers would pay a fee on imported cargo into the United States under a bill introduced into Congress by Rep. Laura Richardson, (D-California).
Proceeds from the fees could be used to make port infrastructure improvements, including security upgrades and for environmental mitigation, according to the Journal of Commerce and the Retail Industry Leaders Association.
The proposed fees in the bill are $25 per twenty-foot equivalent units and $50 per forty-foot equivalent units of cargo. The fees, under the direction of the U.S. Secretary of Transportation, would be in addition to fees the ports of Los Angeles and Long Beach plan to charge for environmental mitigation and infrastructure products.
To read more about the Richardson bill, click here.
The proposed bill would establish a national goods movement improvement account. A portion of the revenues would go to states where the fees were collected. Owners and operators of seaports and railroads could apply for money from the discretionary funds.
Rep. Ken Calvert, (R-California) also has introduced legislation for a national cargo fee. To learn more about this bill, click here.
Sources: Library of Congress; Retail Industry Leaders Association
Penney's to build "green" store
J.C. Penney has joined the green retail movement after beginning construction on a more environmentally sensitive store in Texas.
The 115,000-square-foot store, scheduled to open next summer, will cost about 10 percent more than normal to build but use an estimated 41 percent less energy than a similar-sized traditional store.
The new store features: · A reflective white roof and energy-efficient lighting. · Cotton insulation with material including recycled denim. · Plumbing fixtures that reduce water consumption by 20 percent.
The builder also will recycle unused materials rather than depositing them in a landfill.
Penney will seek the Leadership in Energy and Environment Design (LEED) certification for the new store. If successful, the Fairview, Texas store would become Penney's first LEED-certified store. The special certification is issued by the U.S. Green Building Council.
In similar news: · Best Buy said it plans to reduce greenhouse gas emissions by 8 percent per square foot across all its U.S. operations by 2012. · Safeway has opened its first solar-powered store in California. · Wal-Mart broke ground in Albuquerque last week on an environmentally-friendly 195,000-square-foot store. The retailer began experimenting with green stores in 2005, adding features such as radiant floor heating, photovoltaic skylights and wind turbines, which help save electricity costs.
Sources: Dallas Morning News; New Mexico Business Weekly
Washington Retail Association | 618 Quince St SE, STE A | PO Box 2227 | Olympia | WA | 98501
The Washington Retail Association, WRA, is a 501 C 6 trade association formed to advocate for Washington State’s retailers at the local, state and national level. Since 1987, the WRA has protected Washington's retailers from unreasonable taxes, fees, regulations and legislation. The efforts of the WRA benefit all Washington state retailers and help fuel statewide economic growth.
