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AWC VIEW | Family owned businesses are America’s economic backbone
During the 1992 presidential campaign, then-candidate Bill Clinton famously intoned, “I feel your pain,” an attempt to reassure voters he understood what they were going through. Since then, similar statements of empathy have become a staple for politicians.
But they don’t always ring true for every constituent. Take small business owners, for example.
Most elected officials have no idea what it’s like to risk everything you have or to struggle to meet payroll for your employees and their families as waves of new regulations threaten to drown you and your business.
One politician who got that firsthand experience was former U.S. senator and presidential candidate George McGovern (D).
In a 1992 Wall Street Journal column, “A Politician’s Dream is a Businessman’s Nightmare,” McGovern described his experience running a Connecticut hotel and conference center. He ultimately went bankrupt, a failure he attributed in large part to local, state and federal regulations that were passed with good intentions but no understanding of how they burdened small business owners.
Deeply affected by his failure, McGovern became an advocate for regulatory reform and lawsuit reform, saying, “I…wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day.”
While politicians often tout their support for small businesses, they are the least understood and most overlooked political constituency.
These folks — particularly the owners of family businesses — put their life savings on the line 12 to 16 hours a day, scrambling to make ends meet. They don’t have time to campaign for political candidates or lobby elected officials, yet too often they feel the brunt of tax and fee increases and cumbersome regulations.
Family owned businesses are America’s economic backbone.
According to the University of Vermont, there are 5.5 million family owned businesses in America that contribute $8.3 trillion to the U.S. economy. They employ 63 percent of our people in the workforce and are responsible for 78 percent of all new jobs. And nearly 60 percent of all family owned businesses have women in top management, according to a MassMutual American Family Business survey.
With family-owned businesses so important to our economy, why are they taken for granted?
First, while elected officials may think they understand, most have no idea what it takes to run a business.
For example, growing up in Montana, our family owned and operated Walkerville’s garbage hauling business. From one month to the next, we didn’t know what our income would be because not all of our 250 customers paid on time. In addition, investing in a single piece of new equipment could consume the equivalent of three years’ income.
Politicians who look only at the gross income of a business don’t understand these challenges.
Consider our state’s business and occupation (B&O) tax, which is levied on gross income, regardless of whether a business makes a profit. Over the years, legislators have added surcharges to the B&O tax to balance the budget. In 1993, lawmakers approved a 66 percent increase in the B&O tax on service businesses, and now Gov. Jay Inslee (D) wants to extend a “temporary” B&O tax surcharge to balance the budget.
After retiring from politics, George McGovern said he would have been a better senator if he’d had business experience before running for office, if he’d sweated to make payroll, struggled with complex and costly government regulations, and dealt with the uncertainty of business cycles and global competition.
Perhaps if all politicians did that, they truly would feel our pain.
Don Brunell is the president of the Association of Washington Business.