The issues small business will watch closely in 2023

Mike O'Halloran is the Maryland state director for the National Federation of Independent Business.

Mike O’Halloran is the Maryland state director for the National Federation of Independent Business.

Inflation. Continuity of supply. Lack of work. These three things may be the easiest way to sum up 2022 for small businesses. The National Federation of Independent Business (NFIB) is still below its 49-year moving average, which means business owners are not optimistic about the future. Undoubtedly, much of this anxiety is the result of misunderstandings in Washington where Congress and the White House are constantly at loggerheads. Historic federal dollars are available to help local economies bounce back, but small businesses continue to face obstacles. The NFIB’s December jobs report shows job quality as a major employment issue for small employers. And while the same report has two points, the 44% percent reading of small business owners saying they have job openings they can’t fill is above the historical average of 23%.

In Annapolis, there will be many changes as the new governor, comptroller, attorney general and assembly are sworn in. They will make the transition from advocacy to policy making and NFIB will be there as a resource to understand what small businesses need from their representatives. There will certainly be policy differences, but the focus must be on improving the business climate in Maryland. Progress has been made over the years, but a fragile recovery and fears of a coming recession should prevent policymakers from doing anything to make it harder for small business owners to attract, hire and retain job seekers. Small businesses are the backbone of our government’s economy, so everything passed by the assembly should reflect that.

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There will be a variety of issues for small businesses this coming year. Some of them will have an immediate impact on the bottom line and others will set them up for future success – or failure. Below are the issues the NFIB will be watching closely during the 90-day legislative session beginning January 11.

Minimum wage

Less than four years ago, the convention passed a statewide $15 minimum wage over opposition from small businesses. Our members struggled to demonstrate the impact of the initiative on their ability to run businesses. In the end, lawmakers pushed through the ill-advised proposal. Despite our opposition to the bill as a whole, the legislators acknowledged the concerns of the business community by adding the amendments. That is, it allows businesses with 14 or fewer employees the opportunity to raise up to $15.

But now, politicians, including the governor-elect, are announcing plans to speed up the process. Moreover, there may be efforts to tie the minimum wage to inflation. The state’s gas tax, which has an annual increase related to inflation, went up 18% this past summer. Small businesses cannot afford such increases every year.

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Taken together, these proposals will have a significant and detrimental impact on small businesses in Maryland.

The reality is that small businesses are already volunteering to attract and retain talent. The NFIB’s November jobs report showed 40% of employers increased their compensation. Outright raising the state minimum wage faster than members plan, and at a time when many are already doing so, will hurt our small businesses. Especially in industries such as retail and hospitality that are still struggling to find workers before the pandemic.

If House Bill 698 were enacted in 2022 — a bill that would have accelerated the minimum wage to $15 — a small business owner with 15 employees would have seen the cost of labor jump by more than $50,000 there. in the last six months of the year. It just doesn’t last.

Unemployment insurance

The State Unemployment Insurance Fund (UITF) faced unprecedented stress during the pandemic. The number of claims in 2020-2021 has caused employers’ UI taxes to rise, with some seeing a 400-600 percent increase in their tax bills during the first quarter of last year . The UI tax rate table jumped from A (lowest) to F (highest) in 2021. Fortunately, NFIB with the help of legislative leaders and the Administration Hogan passed legislation lowering employer rates to Schedule C in 2022 and 2023.

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However, the relief may be short-lived as some politicians may seek to increase the weekly allowances that claimants receive. There is also the issue of tying the compensation to inflation. Increasing the amount would not be wise in the face of the economic crisis that has consumed the UITF at an unprecedented rate. And linking future benefits to inflation will make it harder to keep the employer tax rate low. Remember, only employers participate in the UITF in Maryland. Other states such as New Jersey and Pennsylvania include employee contributions in their own funds. Raising wages while asking small businesses to pay the bills is a tall order.

Maryland is sitting on a “historic” general budget surplus. This session, the NFIB will work with any legislator who is willing to improve the business climate in Maryland by investing this surplus responsibly and wisely to help small businesses. and our communities, rather than increasing the cost of doing business in Maryland.

Mike O’Halloran is the Maryland state director for the National Federation of Independent Business.




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