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Employers and contractors enjoy a harmonious relationship

(This post originally appeared on The Hill)

On Monday, the U.S. Labor Department (DOL) wrote a letter to a company that employs independent contractors. In the letter, the department re-affirmed the Trump administration’s position that those workers were not employees. Good.

Besides the Labor Department letter, April also saw a new rule from The Texas Workforce Commission that classified “gig” workers that were hired for jobs through online applications as independent contractors and not employees. Read More…

NYC: A regulation wonderland, a small business nightmare

(This post originally appeared on The Hill)

As a lifelong Philadelphian, I’ve never had much sympathy for the plight of New Yorkers, particularly Mets fans. But that’s all changing. I feel pretty bad for people trying to run a small business in that town. Believe me, Philadelphia has its challenges, but for small operators in the Big Apple, it’s a much tougher life.

Of course, businesses in New York City have a much larger pool of potential customers, but they’ve also got a lot of competition as well as higher taxes and rents. Yet, that’s not even the worst of it. The real challenge to New York City business owners is their own local and state governments. Read More…

Association health plans are enticing but not worth the risk

(This post originally appeared on The Hill)

As a business owner, I think association health plans are a great idea. I think they’re a great option to provide to employees. I think they can save both the employee and the employer a lot of money. How?

For starters, they’re easy to form. The way the Department of Labor’s (DOL’s) 2018 rule (which went into effect this year) was written, businesses that share an industry affiliation or are even located in a similar geographic area could band together to form their own “association.” So a group of packaging distributors or a bunch of merchants on Main Street would be able to do this. Read More…

Universal health care would benefit my small business

(This post originally appeared on The Hill)

Ask someone living in Canada, the U.K., Australia or any other country that has a universal, single-payer or national health-care system and they’ll certainly tell you it’s far from perfect.

My wife is British and her parents both live in London. As they’ve gotten older, they’ve sadly gotten sicker. They could take advantage of Britain’s National Health System (NHS) but, other than the usual doctor visits, they rely on private insurance for the big ticket stuff, which is an option there.

They believe the care is better and faster that way. They’re right and because they live in Britain (as opposed to Canada) they have that option.

The NHS, in particular, has many problems, and you know what they are: long wait periods, stretched resources, underpaid doctors, etc. Read More…

Any US-China trade deal should be taken with a grain of salt

This post originally appeared on The Hill

Doing business in China or even competing against Chinese companies is difficult enough for large corporations. But for smaller companies it has been historically harder. Over the past two decades, I’ve sat and listened to many of my clients — owners of small and medium-sized companies — complain about this.

Many of these allegations have proven true. As part of the country’s aggressive growth plans, the Chinese government has had its hand in helping many of its homegrown companies gain market share by propping up their finances while they sell products at a loss.

The Chinese government has been accused of manipulating markets, playing games with its currency and creating artificial barriers for companies attempting to sell their products there. Read More…

Ivanka must recalibrate her paid family leave plan to make it tenable

(This post originally appeared on The Hill)

On Wednesday, Ivanka Trump headed to Capitol Hill to meet with key Republican members about pushing the paid family leave initiatives that was originally proposed (and ultimately removed from) President Trump’s 2017 budget.

I wish her luck, but it’s going to be a tough sell. Why? Because Trump, like many others in Congress who support the initiative, are all missing a crucial point.

Trump wants to expand the current Family and Medical Leave Act to offer six weeks of paid leave to new parents. Its funding would be provided through unemployment insurance.

“As a mother myself, of three young children, I know how hard it is to work while raising a family,” Ivanka Trump previously said in this CNN report. “And I also know that I’m far more fortunate than most. American families need relief. Policies that allow women with children to thrive should not be novelties, they should be the norm.”

Ivanka Trump is right about this. And she has allies on both sides of the aisle. Sen. Marco Rubio (R-Fla.) has offered up his plan to provide paid leave that would be mostly funded by allowing workers to draw down on their Social Security benefits.

Sen. Kirsten Gillibrand (D-N.Y.) loves the idea so much that she wants to double down and offer 12 weeks of paid leave not only to new parents but to people caring for family members with serious medical conditions.

Although there’s widespread support for some type of government assistance for working mothers — and some states and cities have already mandated that employers provide time off — the current initiatives proposed by Trump, Rubio, Gillibrand and others are facing stiff opposition because, regardless of what’s on the table, the costs would be substantial.

“My impression is the White House is increasingly engaged on this and making it a priority as they look forward to what is possible this year — assuming one thinks bipartisan legislation is possible in this climate,” a senior GOP aide told a Washington Post reporter. “There are folks who know the (Republican) party needs a position but are unsure of how to craft a policy, and there are still folks who don’t think there is a federal nexus to be played.”

There is an answer to the family leave issue — both for Republicans and Democrats. It just requires its supporters to consider a more-targeted approach. Instead of providing the federal benefit to all workers, the legislation should focus on just half of them: the more than 50 percent of the workforce employed by small businesses.

The fact is that most large employers in this country already provide generous paid family leave. Why? Because they can afford to.

Paid time-off has been a hot issue over the past few years, particularly as employees from the millennial generation — who, in countless surveys, have vocally supported flexibility, mobility, independence and work-life balance — are now becoming a greater share of the workforce. So companies, particularly big companies, have responded.

Netflix, for example, provides up to a year off for its employees who are new parentsHilton hotels offer up to 10 weeks of paid time-off for hourly workers. Tech firms like Facebook, Microsoft and Google all provide variations of unlimited vacation plans.

These are just the big names but, in my anecdotal research over the past few years, I haven’t encountered a single large company that doesn’t offer some form of generous time-off for their employees, particularly for new parents or those caring for others with a medical issue.

So that takes care of half of the workforce. Knowing that, we should be focusing on the other half.

Those would be the employees at small firms — let’s say with less than 500 people, because that’s how the Small Business Administration defines them. Firms like those are struggling to compete with the generous benefits offered by larger competitors; they can’t afford to offer the kind of paid time-off that big companies provide.

A federal paid time-off plan for new parents that’s targeted only at small businesses would help level the playing field. It would reduce small companies’ costs. It would allow them to hire more people and grow their businesses.

It would also be done at half the cost of all of plans currently under consideration because only half of the workforce would qualify — the half that actually needs it.

A federal paid time-off bill doesn’t have to be so expensive. Not as long as it is focused on the right people.

Small-business owners hurt by shutdown must blame themselves

This post originally appeared on The Hill

About 10 years ago, my small business almost went out of business.

At the time, my firm was involved in a very profitable project with a very large client. Things were good then. We were incurring hundreds of hours on the job and charging our maximum rate. The client promised a long relationship.

I thought about that experience as I listened to the testimony of a few of my fellow small-business owners this week at the House Committee on Small Business. They were complaining about how the recent federal shutdown affected their companies.

“The shutdown affected Port City by furloughing SBA staff who were working on a loan application for a new bottling line,” Bill Butcher, the founder of Port City Brewing Company grumbled. “Because of the closure we were unable to lock in an interest rate, which could increase the cost of our loan by thousands of dollars.

Butcher’s problems were understandable. And he certainly wasn’t alone. Heidi Gerding, CEO of HeiTech Services, Inc., a woman- and service veteran-owned small contracting business, complained that the shutdown had a “measurable impact” on her business and employees.

Other stories were reported around the country about craft breweries that were unable to get the permits to ship beer, business travelers held up on the issuance of passports and delicatessen owners who saw their lunchtime business fall away because of the lack of customers from a nearby federal building.

“Unfortunately, the stories we heard today of the lasting pain inflicted by the shutdown mirror countless others on Main Streets in every corner of America,” Chairwoman Nydia Velázquez (D-N.Y.) lamented.

I certainly sympathize with these people. I really do. But funny thing, though: I just didn’t see this in my own little world. During the entire month of January, I met and spoke with many of the hundreds of small-business clients my firm serves and asked them about the effects of the shutdown.

Across the board, the response was muted. Even in my own business, like my clients, the shutdown had no impact. We continued to work on projects, send out invoices, quote new jobs and deal with the same headaches.

I don’t think my experience — or my clients’ — was the exception. In fact, I believe that the grand majority of the 30 million or so small businesses in the country were largely unaffected by January’s shutdown.

Don’t believe me? Then why were so many jobs added, particularly by small businesses? Why is confidence still so high? Why was January’s economic growth in the Midwest (of all places!) so strong? Why is the service sector up, and why are purchasing managers planning on increased buys in the months to come?

Of course, not all the economic data is so positive because that’s just the nature of economic data. But aside from the small number of businesses that were impacted by the shutdown, why did so many others seem to emerge unaffected?

Maybe it’s because they learned something that I learned a decade ago when I lost that big client. I managed my business poorly. I made errors in judgment. The largest error was putting all of my eggs in one basket.

I disobeyed the cardinal rule that so many other small-business owners I know who have been in business for many years have learned: Spread the risk. My bad management almost ruined my business.

So to Bill Butcher and Heidi Gerding and all the other business owners who were impacted by the shutdown, I can only say this: Don’t complain. Like I learned from that experience, you should learn from this experience.

Ask yourself about your business model. Think about the dangers you incur when your entire business:

  • is built around one customer;
  • is located in a risky place;
  • involves selling to an industry that’s exposed to a significant downturn; or
  • involves shipping products that are reliant on government approval.

Maya Angelou once said “If you don’t like something, change it. If you can’t change it, change your attitude. Don’t complain.” I sympathize with the predicament and the challenges faced by the many small-business owners affected by the shutdown, but they shouldn’t complain. Like me, their difficulties are not the government’s fault. They belong to them.

Gene Marks is founder of The Marks Group, a small-business consulting firm. He has written on economic and financial issues for The Washington Post, The New York Times and The Guardian. He also frequently appears on CNBC, Fox Business and MSNBC.