Main Street Eyes Taxes, Wages, Marijuana in Midterm Elections
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Small-business owners around the country are casting their ballots as the race to the 2014 Midterm Election finish line comes to an end -- and how Main Street votes could determine not just who will go to Washington, but also the outcome of key initiatives that affect all of our bottom lines.
FOXBusiness.com spoke to industry insiders and local businesses to gauge the pulse of Main Street and see what issues the small business community is most intent on following as candidates duke it out.
From the agriculture industry and the oil sector, to franchises and marijuana retailers, the recurrent themes that pose hurdles for smaller players are too much regulation, minimum wage hikes and immigration reform. And in anticipation of a lame-duck session, there’s hope for change, but it’s not all roses.
According to a survey released last week by the National Federation of Independent Business (NFIB), a strong majority (two-thirds) of small businesses think Capitol Hill politics are “at the heart of the country’s economic problems” and 76% believe the current regulatory environment doesn’t favor someone looking to start or grow a business.
“Virtually every candidate running claims to care about small business and yet there’s a clear sense among small business owners that Washington isn’t listening,” NFIB President and CEO Dan Danner said.
Still, there are signs that optimism is on the rise. Smaller players are looking forward with renewed confidence, according to the 2014 Hiscox DNA small business survey, which found that 51% of smaller businesses in the U.S. are feeling good about the year ahead and want to make sure their voices are heard this week.
Ag, Oil Want Relaxed Regulations for Christmas
Across the corn belt, smaller farmers and ranchers have a pretty clear holiday wish list to get sorted out that includes tax questions, environmental concerns and labor-related issues (immigration reform, minimum wage).
“We’ll be grateful for whatever gets accomplished this year, but as for the big picture...” said Dale Moore, executive director public policy for the American Farm Bureau Federation. “[We] feel strongly about Congress and the White House getting the fiscal and budget process in order to refuel economic recovery.”
On the topic of taxes, getting Section 179 and the bonus depreciation break extended is at the top of the wish list for rural communities in battle ground states like Arkansas, Kentucky and Iowa, Moore explained.
If all the indicators so far are right, the Republicans will take the Senate, which will possibly pose as a double-edged sword for the agricultural sector, according to DTN Washington editor Chris Clayton. Clayton explains that small-to-medium size farmers “want the EPA off their backs, regulatory-wise” and at the same time don’t want to see changes in terms of ethanol.
“A lot of people are concerned if you get a GOP House and Senate, there will be changes to renewable fuel standards,” Clayton explained. “And people in the corn belt, regardless of political views, are protective of how that would affect prices of grain.”
But Ag guys aren’t the only ones feeling the constraints of heavy regulation -- in the oil and marijuana sectors, most are hoping for the loosening of some rules and perhaps less, but more constructive regulations.
For oil, small business will be closely watching the races in certain battle ground states such as South Dakota for indicators on what will happen with the Keystone Pipeline XL. Main Street will also be on the lookout in Alaska and Louisiana for indicators on a possible lift on U.S. crude oil export restrictions, which could open up business opportunities for all kinds of participants, from oil producers and refiners to trading houses and shipping companies.
“The Obama Administration is already studying whether to lift the restrictions on oil exports, but this is something that is likely to face a lot of opposition in Congress from both Democrats and Republicans, who worry that lifting the restrictions could cause gasoline prices to rise,” said Herman Wang, senior editor of oil news at Platts.
According to a recent Reuters report, depending on who takes a Senate seat from several of these battle ground states and who wins certain gubernatorial races could mean which of the energy topics -- EPA carbon regulations, the Keystone Pipeline XL’s approval, relaxing crude oil export rules, developing clean energy technology -- will take priority.
Wang says his impression is not much will change even if Republicans take the Senate as it’s “unlikely they’ll get a filibuster-proof majority. Republicans could bring up all the pro-drilling, anti-EPA, pro-Keystone bills they want, but either Democrats will likely filibuster them or Obama will likely veto them.” However, he thinks “a Republican-controlled Congress could give the Obama administration some leeway to loosen the spigots somewhat” on U.S. crude oil exports. Either way, as Wang put it, “it’s not a slam dunk anything will happen.”
Marijuana on One, Reefer on Two
And this is a sentiment echoed by the marijuana sector, as they fight to gain ground in Alaska and Oregon on legalization. If measures are approved in these two states, they would become the third and fourth states to legalize marijuana. Voters in Washington, D.C., and Florida will decide whether to allow medicinal marijuana use.
The marijuana industry in states where it has been legalized (Colorado, Washington) is seeing some of the tightest regulations around -- “everything from the labeling to the label on the text, the list goes on,” said Mason Tvert, director of communications for the nation’s largest marijuana policy organization the Marijuana Policy Project. "But while compliance is something retailers deal with “what we see is that they want to, and it’s a new industry that want to be legitimate and produce a product that’s widely consumed."
The latest figures on tax revenues from the Colorado Department of Revenue hit a new high in the month of August, with recreational sales totaling about $34.1 million, compared to $29.3 million the previous month. And Colorado has taken in about $45 million in total tax revenues from both medical and recreational marijuana year-to-date. The industry has also served as a jobs creator across Colorado. Per a September report by the Coloradoan, the state has licensed more than 18,660 individuals (and counting) to work in Colorado’s cannabis industry, indicating the prospect for new jobs is only growing. And according to Alexandra Hall, chief economist with the Colorado Department of Labor and Employment, as of the first quarter of 2014, jobs growth for the marijuana sector totaled 3,523; second quarter figures will be available in November.
Tvert says it’s “not really a matter of Republicans versus Democrats” because there are members of either party who are “more progressive” on the legalization debate than others, “but public attitudes are clearly shifting … and it’s only a matter of time before that is reflected in laws nationwide.”
The Great Wage Debate
On the ag-labor front, where employers are heavily dependent on seasonal labor, immigration reform will play a big role in helping hire workers for the available jobs. He says there’s a worker shortage, and while farmers typically pay above the minimum wage, there’s not enough people willing to do the work to meet the needs of all farmers. The lack stems from it being seasonal, according to Moore, “and it results in a significant demand on workers from other countries willing to come do the work.”
Continuing on the topic of jobs, raising the minimum wage beyond the $7.25 federal hourly rate is a key ballot initiative for this midterm cycle in several red states including Alaska, Arkansas, South Dakota and Nebraska. But voters across the country are mixed on the possible hikes and some are saying that increasing costs for small business owners by introducing raised wages won’t help drive economic recovery.
“We are new small business owners, finding a second career through franchising after serving our country in the military. Any labor cost increases, especially as we look to build and grow our business, would be crushing,” said Herv Breault, Philly Pretzel Factor franchisee.
For Nancy Bigley, CEO of Bottle & Bottega in California, her main concern with state specific wage hikes is that it could hamper business expansion into or out of certain states with competitive hourly rates.
“Starting a business has been one of the most exciting, yet challenging things that I have ever experienced,” Bigley said. “I’d like to see a future government that applauds, rallies and supports those who decide to take that risk.”
The bottom line, she says, is that Main Street is hopeful that a Republican majority in the Senate will allow for greater passage of small business-friendly policies that will encourage both expansion and job creation.
“This is the only way for the small business community to drive economic growth,” Bigley said.