Wednesday, January 24, 2018

283. Here's to our small business owners

Growing up, our family had two distinct sources of income.

Primarily, my father worked for General Motors. As part of the auto workers’ union, he received good pay and excellent benefits. He worked hard, rarely missed work until later in life, and provided for his family. We all knew that our lifestyle was dependent on my father and his employment at General Motors.

The other was small business. My parents ran several very small businesses, mostly retail, in the North Eaton area. In fact, all of the businesses were located in the same little shopping center. My father, ever the entrepreneur, was not afraid of risk. My mom, always the willing partner, ran the businesses. We started with a doughnut shop/restaurant where I often spent time earning a few dollars after school selling lottery tickets and eating bacon cheeseburgers. Putting to use what I’d learned in an art class, I was proud to design and paint the business sign. It was the first of our community business, where you really got meet and know the people that made up your town.

Then — my father’s champion vision — we open a video rental store (we started with both VHS and Beta). We it built from scratch and I remember putting the final touches on the place while watching the NCAA Final Four on a small television. It was my favorite business because it provided my friends and me with thousands of free movies. I also opened my own sports card shop within the video store, which was my first venture into entrepreneurship. I worked there many summers and evenings.

When video started losing steam, my father got excited about screen printing and bought a small business. I would come home on weekends and build screens for my mom. Archaic in the way the printing business works today, it was a lot of work and pressing deadlines.

Finally, my mom went to cosmetology school and became a beautician. We bought the local hair salon, which included tanning beds (and of course free haircuts). When she retired from this business, she did so having successfully managed several small businesses.

It is not surprising then that I have a special place in my heart for small businesses. For most, they are family businesses with everyone contributing, and often surpass the notion of a 40-hour week. Many family meal discussions focused on the way to improve business or the brainstorming of new ideas. Small businesses are the heart of our communities, and ours was no different. I remember the excitement of my parents hosting my sister’s softball team at our restaurant for breakfast before a tournament game.

Over several years, I got to interview and write about more than 100 small businesses in Lorain County. From barber shops to pet-sitting, it was an assignment I embraced as much as I was tasked. Many of them were the same stories I grew up with — the pursuit of ambition, debating ideas, taking risks, and realizing dreams. Some of the businesses were well considered and destined to thrive; others I cringed at the unlikelihood of success. I never want to see a business fail and the dreams die. At times, I wanted to start a small business consulting business, putting to use my experiences growing up in combination with my studies in business and law.

And that is the real point of this column. Managing small businesses, particularly new small businesses, is hard work. They are subject to all the same challenges of large companies — industry regulations, overhead expenses, insurance, employment laws, marketing, accounting — but have to do it with fewer resources. They are inspired by passion as much as profit but often compete with those only chasing profit. Small business owners work long hours and there are no such thing as sick days or paid vacations. For many, they have little room for error, often sweating payroll or losing sleep over next month’s rent. They rely on employees they often can’t offer benefits and suppliers willing to sell small quantities at reasonable prices. But most of all, they rely on customers. They hope that customers will make the effort to consider their business, even if is an extra stop or costs a few more dollars.

There is perhaps nothing more powerful than where we spend our dollars. We decide which companies succeed or fail. Our purchases should reflect our values and we need to place a greater value on the economic heartbeat of this country.

From retail and service businesses to small manufacturing, they deserve our business.

Friday, January 12, 2018

282. Wealthy companies, welfare workforce

A report from Policy Matters Ohio detailed that Amazon, now one of Ohio’s largest employers, has risen among the ranks of companies that find their employees receiving government assistance due to low or unsustainable wages.

Research director Zach Schiller noted there were 1,430 Amazon employees or family members getting assistance under the Supplemental Nutrition Assistance Program as of last August, according to the Ohio Department of Job and Family Services. “That ranked the company 19th among all Ohio employers. Just months before, it wasn’t even in the top 50,” he said.

Of course, it’s not just Amazon, as other companies such as Wal-Mart often leave their employees needing more. Plain Dealer reporter Janet Cho wrote in 2016 that Ohio’s median wage is over $16 an hour, and “it’s clear that Wal-Mart remains a force pulling that median wage downward. As of last year, 14,114 Walmart employees and family members qualified for food stamps in Ohio, because the family member who worked at Wal-Mart was paid so little.”

You may recall that last year Amazon accepted proposals from across the country to build their second headquarters. “We expect to invest over $5 billion in construction and grow this second headquarters to include as many as 50,000 high-paying jobs – it will be a full equal to our current campus in Seattle,” the company announced. “In addition to Amazon’s direct hiring and investment, construction and ongoing operation of Amazon HQ2 is expected to create tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community.”

Desperate for jobs, cities from Lorain to Atlanta sent in proposals offering Amazon billions in tax breaks and other incentives. PBS reported, “Some candidates have focused their bids on generous incentive packages. In pitching Newark, N.J., offered $7 billion in tax incentives, property tax abatements, and breaks from the local wage tax. California will offer $300 million in tax incentives over several years if one of its cities is picked.”

It is the evolution of a market economy, or perhaps the result of it, that local governments have to compete for businesses that offer jobs and tax revenue. And while the resulting public and private partnerships and agreements may be good for the local economy, too often local governments serve at the mercy of businesses.

As complicated as that can be, it is inexcusable that these businesses — often very profitable international corporations — do not pay their employees a level above public assistance.

This country flourishes with a strong middle class. And a strong middle class means that workers of major corporations should not need to be subsidized by taxpayers to cover their basic needs. Henry Ford paid his employees $5 per day (more than double the average factor wage at the time, and about $15.40 per hour in today’s currency when adjusted for inflation) to not only stabilize his workforce, but also create a class of people who could afford his product.

Yet, here we are. Cities compete for companies through tax breaks and other incentives and the federal government made life even easier by giving corporations a tax break. Shareholders, CEOs, and other executives make millions while their employees cannot afford to feed their families. And the thought of a $15 minimum wage (which is barely more than $30,000 per year) with affordable health care is somehow considered absurd.

It is far from absurd, in fact, it should be a requirement for any company receiving corporate welfare. If governments are asked to create favorable business environments, then businesses should take care of their employees. Government shouldn’t have to do both.

Sunday, January 7, 2018

281. Tax cut amounts to bribery

Our American democracy — that is, our representative society — means to most that those elected to office will serve those who elected to them, not just those who got them elected.

It also means that important issues in America society, like taxes, should be carefully presented and considered. They should be debated, deliberated, explained, and revised as necessary. Something as important as taxes should aim at bipartisan consideration and should certainly factor public opinion.

Unfortunately, none of those things mattered to congressional Republicans, who quickly passed, along party lines, a bill that wasn’t debated, a bill they knew little about, and a bill that ignored public opinion. The unpopular $1.5 trillion tax bill (a Harvard CAPS-Harris survey found 64 percent opposed the bill) provides big tax breaks to corporations and the wealthy.

The average tax cuts in 2018, according to the Tax Policy Center, look like this:

• Households making less than $25,000: $60.

• Middle class households: $900.

• Top one percent: $51,000.

• For corporations, the tax rate will decline from 35 percent to 21 percent.

Of course, these are just averages and will differ by individual and entity.

Considering that the country is already $20 trillion in debt, Republicans have forever given up their ability to complain about the national debt, as this bill may add another trillion (what happened to the Tea Party anyway?). It may also threaten Medicare and Social Security.

For individuals, the cut for middle and lower class households basically adds up to a bribe for large tax breaks on the wealthy. Many social media comments include those who say they are happy as long as the bill reduces their own taxes. But it is a matter of perspective — $60 is a couple tanks of gas, $900 is a set of tires, but $51,000 is a small house, a modest Jaguar, or a decent boat. Of course, $51,000 over 10 years is $500,000 and the possibilities are nearly endless. As a member of the middle class — you’re welcome!

The biggest fallacy is that the reduction in corporate tax rates will lead to more jobs and higher wages. Taxes are an expense, and when you reduce expenses, you increase profits. Corporate executives and shareholders seem to have an affinity for profits and bonuses, dividends, and higher stock prices. After outsourcing production, busting unions, and increasing corporate welfare, reducing taxes are all that remains. Sure, it could lead to investment and innovation (hopefully not machines that replaces workers), but this is about greed and political influence. If the corporate tax cut is so good for the American workers, why not include an increase in the minimum wage? It’s trickle down and it hasn’t worked — it doesn’t work.

Of course, President Donald Trump, fresh off of his second Politifact “Lie of the Year” Award, is as boisterous as ever, claiming this is a “middle class miracle” and that it essentially repeals Obamacare. It isn’t and it doesn’t.

In fact, economist Robert Reich called it “unbridled greed, utter disdain for the rest of America, and a cynical assumption they can get away with anything by repeatedly lying through their teeth.”

Goodbye democracy, welcome oligarchy.