Business Owners Assess the Midterms


It's time to put away the yard signs, tear down the fliers, and wash the "I voted" sticker grime off your clothes. After months of hand wringing, midterm elections are finally over. But what do the results mean for small-business owners? Actually not much, says Andy Birol, who owns a small-business consulting firm in Ohio, right smack in the middle of election madness. He says that the Democrats' capture of the House of Representatives and most likely the Senate matters to small companies about as much as did the ill-fated Janet Jackson Super Bowl snafu a few years ago.

It's not what you'd expect given the intensity of campaigns and issues at stake. According to last week's Wells Fargo/Gallup Poll, 89 percent of small-business owners said they planned to vote in this year's elections. Yet less than a quarter thought that the elections would have an impact on their businesses. Twenty-one percent didn't think the elections mattered to them at all.

That's because people who start companies are by nature glass-half-full types, says Birol. And the Gallup survey bears that out. Its optimism index, which measures how small-business owners rate the future of their companies, is at the highest level in a year and a half. Entrepreneurs feel they can boost sales regardless of what else is going on. And many of the issues that small-business owners said matter to them, such as energy prices, would seem to have little to do with the outcome of the elections.

What about issues like healthcare and the minimum wage, which are likely to see big changes as a result of who is in power? With a Democratic House and Senate, healthcare might be a wash, with the Democrats unlikely to get anything through a Republican White House for two years. In any case, small-business owners believe, healthcare costs were probably going to increase regardless of who won on Tuesday. It would be just a matter of how.

With the minimum wage, things are trickier. Rep. Nancy Pelosi, who is expected to be the next House speaker, has put raising the national minimum wage at the top of her agenda, which will force President Bush to take a firmer stance on the issue. The standard response from opponents is that a minimum-wage increase would disproportionately hurt small-business owners, forcing them to lay off workers.

That's just not true, argues Ken Jacobs, head of the University of California–Berkeley's Center for Labor Research and Education. In states that have increased the minimum wage, growth at companies with fewer than 50 employees has been twice that of companies in other states, he notes.

This year voters in six states took matters into their own hands by approving ballot initiatives to raise the minimum wage. In Ohio, there's an added wrinkle requiring small businesses to keep payroll records on file for three years after an employee leaves. The measure also gives former employees the right to sue if the business violates the requirements. Small-business owners there have complained that the added paperwork will hit them harder than the actual wage increase.

All the votes may be in, but the jury is still out.

health care
minimum wage

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