Speaking to a room full of entrepreneurs and business leaders earlier this month, President Obama lauded small businesses as “the lifeblood of our economy,” noting that they create most of the nation’s new jobs and can “lead the way” in reviving the economy.
Speaking to the entire country two weeks later, the president reaffirmed his faith in and reliance on the nation’s smallest employers during his State of the Union address, outlining steps his administration hopes to take this year to help them increase sales and add jobs.
But will those steps actually work? Some small business owners aren’t so sure.
“An entrepreneur flipped on the lights in her tech start-up and did her part to add to the more than 8 million new jobs our businesses have created over the past four years,” Obama said in the second sentence of his speech, later asking lawmakers to “do more to help the entrepreneurs and small business owners who create most new jobs in America.”
Throughout his speech, the president repeatedly circled back to business leaders and how his plans for the coming year — on everything from trade to immigration to fair pay — would help them move the economy forward and put more Americans back to work.
In part, he said, that starts with opening up access to customers overseas, as the majority of the nation’s exporters are small firms. Stumping for new trade partnerships his administration is closing in on with nations across both the Atlantic and the Pacific, he argued that the agreements would help small businesses “create even more jobs.”
Small business advocates have largely supported the trade deals, pointing to polls that indicate many employers who do not currently sell goods abroad would consider doing so in the future, if they can afford it.
On the minimum wage front, though — which became one of the core policy issues in the speech — business owners and advocacy groups are split on whether the president’s plans to lift the minimum from $7.25 to $10.10 per hour would actually benefit small firms.
During the address, Obama argued the move would put more money in the pockets of consumers, which would “give businesses customers with more money to spend.” In a joint statement, members of the American Sustainable Business Council, a consortium of small business groups, applauded the proposal, noting that raising the minimum wage would address “the largest problem business leaders see with today’s economy: weak demand.”
In addition, the group argued, “decent wages for the lowest earners also helps businesses realize significant cost savings from lower employee turnover and reduced expenses associated with hiring and training new employees.”
Others say raising the minimum would force business owners to make one of two tough choices: cut back on staff or raise prices.
“The call for minimum wage reform is something I support, but I don’t hear anyone talking about what that means for prices,” Jody Manor, owner of Bittersweet Cafe and the Waterfront Market in Alexandria, Va., said. “Most of my employees make the $10.10, but what happens when I have to pay entry level at that wage? What does that mean for my prices in a world used to the Wal-Mart model where we all expect everything to be cheap?”
Citing his group’s polling, International Franchise Association President Steve Caldeira noted that more than two-thirds of franchise business owners say they would make personnel decisions to adjust to a wage hike. As a result, he said, the proposal would “raise employment costs and jeopardize entry-level jobs, which are critical for lower-skilled workers to move up the economic ladder.”
Others were more concerned with the president’s unbridled confidence in the health-care law. Karen Kerrigan, president of the Small Business and Entrepreneurship Council, said that “small businesses will continue to be harmed by higher costs, lost plans and regulatory burdens in the coming year,” and she lamented that “the president had no concrete plans to fix Obamacare.”
During the parts of the speech that touched on the health-care law, she said, “it was all puppies and butterflies.”
Conversely, Kerrigan and most of the small business leaders we spoke to stood firmly behind the president’s push for comprehensive immigration reform, which he argued would “make our country a more attractive place for businesses to locate and create jobs.”
“Obama’s call to enact immigration reform ought to be taken seriously by Congress, where legislation should be sought that ensures appropriate access to workers of all skill levels without unfair or overly burdensome requirements,” Todd McCracken, president of the National Small Business Association, said in a statement.
John Arensmeyer, president of Small Business Majority, another small-business lobbying group in Washington, said an immigration overhaul would likely “foster a stronger workforce and increased entrepreneurship.”
Still, many employers are wary that the president will actually accomplish much of the agenda he outlined on Tuesday, especially given the lack of bipartisan cooperation right now in Washington.
“I believe that there weren’t any new ideas, just continued policies of uncertainty,” David Glazier, president of Fleet Transportation, a luxury car service in Alexandria, Va., said of the speech in an e-mail. “As small business owners, we will continue to be threatened by unfriendly policies and more likely uncertainty in healthcare, legal red tape and practices that don’t energize innovation, risk taking or growth of jobs.”
Others, such as Cidalia Luis-Akbar, president of M. Luis Construction near Baltimore, were decidedly more pleased with the policies the president put forth during the address.
Still, she, too, thinks Obama is “perhaps a bit too hopeful about this coming year and what he can accomplish with an unsympathetic Congress.”