Paid sick leave and mandated healthcare…what do these two things have in common? They are only two of the many mandates that are introduced in the legislature year after year. And year after year, NFIB fights to make sure that the voices of small businesses are heard so that these mandates do not become law and negatively impact their ability to own and operate their businesses. What many politicians in Sacramento do not seem to understand is that each mandate places a burden on our small business owners.
Eventually, there are not enough hours in the day or dollars in the bank to keep up with all the mandates, so inevitably small businesses suffer by losing business, cutting staff and some close their doors forever.
So what is the solution? Is stopping the bad stuff enough to keep the doors of small businesses open? Small business owners are grateful to the governor and some state leaders for their steadfast opposition to many costly mandates and onerous regulations, but simply putting the brakes on the negative is no longer enough. We, along with our leaders in Sacramento, must start taking action on policies that promote and assist small businesses in expanding and being successful. The old adage about getting out of a hole is appropriate. We might have stopped digging (that is up for debate), but we are still stuck in a hole and must take the necessary steps to start climbing out.
First and foremost, we need to make it less burdensome to do business in California. How much bigger is the regulatory burden on small businesses? Well, a 2005 study conducted by the U.S. Small Business Administration found that federal compliance cost small business (20 or fewer employees) 45 percent more than it did for large businesses (500 or more employees). That means a larger business pays an average of $5,282 per employee each year to comply with federal regulations, while a small business pays $7,647 to comply with those same regulations. A state study mandated by 2006 legislation is more than a year and a half overdue, but is expected to show the state burden and disparity is even greater.
There was an attempt this past session to fix this disparity – Senate Bill 356 by Senator Rod Wright. This bill would have required state agencies to analyze the economic impact of potential regulations on small businesses and specified the criteria that must be included. It also required that they actively seek out the input of small business owners during the regulatory drafting process.
Neighboring states including Arizona and Nevada already have more extensive processes in place that have significantly benefited the economy of those states – sometimes to the detriment of California. Unfortunately, the bill died before even getting a vote on the floor of the Senate.
Second, we need to encourage businesses in California to stay here. With increasing regulations, an ever-growing unemployment rate and a generally unfriendly business climate in California – what incentive does any business, large or small, have to stay here? I recently had the opportunity to travel to Nevada to hear from businesses as to why they had left California. Over and over, I heard small business owners say how they felt unwelcome and overburdened in California. When they were wooed by other states, including Nevada, they couldn’t get out of California fast enough. Our state leaders need to help with getting their business started, working through red tape and making sure they are successful. However, in a move that adds insult to injury, our elected officials seem prepared to eliminate the Office of the Small Business Advocate, the only office dedicated to working for the benefit of small business owners – and the jobs they create – across the state. California needs to rethink its strategy when it comes to encouraging businesses to come here and stay here. Let’s roll out the welcome mat and make sure we keep the entrepreneurs that we grow, and let’s be sure to ask existing businesses those four important words: “How can we help?”
Finally, if California is able to accomplish the above two items – imagine how the economy would improve. Small businesses would begin to expand, hiring more people in their communities. If we would just allow small businesses to create jobs – something they are really good at – we might be able to steer ourselves out of this bad economy.
For many of our leaders, it is hard to make investments in any area of government in the current fiscal environment, but they should take heart in the fact that a successful small business economy will provide the resources for the valuable programs that benefit Californians.