Truckers Sidelined by Safety Regulations

In the trucking world, safety comes first, but continued concerns about lengthy workweeks and driver health are sending some truckers back to bed instead of onto the road. New regulations by the Obama administration, which will limit truckers’ workweek to 70 hours from 82, were announced in December 2011, but the industry had 18 months to implement the regulations.

The transitional costs over the 18-month period have already cost the industry roughly $320 million, according to Dave Osiecki, Vice President for Safety Policy at the American Trucking Association, and the Federal Motor Carrier Safety Administration (FMCSA) estimates that the regulations could cost the industry a half-a-billion dollars.

Along with a decrease in workweek hours, the rules require that after every 70-hour workweek truckers take 34 hours off to “restart,” which must include two 1-5 a.m. time periods. Additionally, truckers can’t be on the road for more than 11 hours at a time and are now required to take a 30-minute break during the first eight hours of any shift.

The biggest complaints about the new rules have come in the form of industry concerns about costs being passed on to consumers. Fewer truckers working fewer hours means less time transporting goods from place to place, meaning consumers might have to start paying more for products and shipping.

“If you buy more trucks and hire more people to close the gap, someone has to pay for those new trucks and people. On the other hand, if companies decided to operate at less capacity, that will also increase rates, and who pays for that? The consumer,” said Lyndon Finney, Editor of The Trucker.

There is one major upshot to the regulations, and that’s safer roads and an estimated $200 million in savings from better driver health.

“FMCSA developed the rule based on the latest sleep science and sought input from all sectors including small business owners, drivers, shippers, safety advocates and trucking companies,” said Anne Ferro, the U.S. Department of Transportation’s (DOT) Federal Motor Carrier Safety administrator.

The number of people killed each year in large truck crashes fell by almost 30 percent, from 5,282 in 2000 to around 4,000 in 2011, and, according to the FMCSA’s analysis, the new rules will prevent some 1,400 crashes and 560 injuries, saving at least 19 lives each year.

Despite these regulations going into effect, the battle continues. In March, oral arguments were presented in a lawsuit by the American Trucking Association asking the U.S. Court of Appeals for the District of Columbia Circuit to reverse the new regulations, but it is not clear when that ruling will be handed down.

For now, it’s hard to say what the true impact on truckers, the industry, manufacturers, and consumers will be, especially when fewer than 2 percent of drivers work the 82 hours per week. According to DOT, 85% of drivers won’t even be impacted by the new regulations. If anything, long-haul truckers that are paid by the hour and specialty shipments will be hit the hardest.

It will be a slow process for the industry to return to its pre-regulation productivity levels, but it’s not an impossible feat.

 

Obama Care is Coming

Change is a-coming on the health care front. Obamacare is making sure of that. Otherwise known as the Patient Protection and Affordable Care Act, this 2400-page bill, passed into law in 2010, is confusing and worrying an awful lot of small business owners.

 

What Does it Mean for Business ?

The Act originally stipulated that every American citizen must have health insurance as of January 1, 2014; the date has since been pushed forward to the beginning of 2015. The impact for business? The bill also requires employers to make quality, affordable health insurance available to their full time workers. This simple task sounds like it carries the potential for a huge – and perhaps expensive – hassle. But a closer look at the details of the bill will give a clearer perspective on the situation.

How Small is Small Business and What is Full Time?

Small businesses are exempt from the requirement to provide health insurance, but must inform their workers about the Act. According to the PPACA, a small business is one that employs fewer than 50 people full time. Should an enterprise of this size voluntarily opt for employee health insurance, it must comply with the new law. Employers of more than 50 workers are subject to fines if they fail to come through. For the purpose of the PPACA, a full time employee is defined as working at least 30 hours weekly or 130 hours monthly, on average.

Are You Exempt?

At this point, you may be breathing a sigh of relief if you calculate that you have fewer than 50 full time employees. Not so fast. If your business is seasonal – say a tourist gift shop or a ski resort – the folks in your employ can be assessed as FTE (full time equivalent employees). FTEs, who average 120 hours of work in a month, or work for a period longer than 4 months, are also eligible for the health care provision.

Confused yet? There’s more. Less-than-50-employee enterprises with a common owner may be grouped together for purposes of this law.

What’s in Store?

Marketplaces for health insurance, called “exchanges,” are part of the plan, to be run by individual states. These will include Small Business Health Options Program exchanges for firms with fewer than 100 employees. SHOP, as it is dubbed, will facilitate small businesses cooperating to increase their joint health insurance purchasing power. However, it’s up to the states to decide whether to limit SHOP eligibility to businesses with <50 employees rather than <100.

Good News

The good news is that once an enterprise is part of SHOP, it may continue to participate even if the number of its employees increases to over 100. More good news: a small business tax credit is available for two years to cover 50% of the cost of health insurance premiums on plans purchased through SHOP. Even more good news: PPACA will make affordable health insurance more available to small business owners themselves. Eighty-three percent of entrepreneurs who presently have no coverage whatsoever will become eligible for health insurance under the provisions of the Act.

Shop Around

Despite the appeal of purchasing insurance via the Small Business Health Options Program, it pays to shop around. Self-insurance may turn out to be a better choice in terms of price and/or benefits.

The Bottom Line

Looking at the facts regarding its impact on small business, it seems that Obamacare, far from being a bogey bill, may actually be of benefit to employers as well as employees. As Richard Lorenzen wrote in Forbes recently, “The Affordable Care Act … enables us to provide a better life for those who help make our success possible everyday.”

 

For detailed information on the provisions of the PPACA, see the US Department of Labor’s Affordable Care Act Regulations and Guidance.

Obama Held on to the Presidency… What Does This Mean for Small Business?

Now that the presidential election is over, and the dust has settled a bit, we are left to speculate about what the next four years will bring. Whether or not you supported President Obama, it is hard to deny the uncertainty that still reigns supreme. There is much ado about fiscal policy, about staggering national debt, about income inequality, about homeland security, about natural disasters, about the world economy, and our ability as a individuals and as a nation to cope with it all.

For the owners of America’s smallest businesses, this chronic uncertainty has been bleeding into daily operations and management mindset, making an indelible impression on overall optimism and economic outlook, and in short, has changed the way small business owners do business.

Has anything changed now that the presidency has been set? Here is a rundown of some of the key issues affecting small business owners:

  • Obama’s re-election took away the uncertainty over The Affordable Care Act or “Obamacare” as it’s called, the President’s auspicious healthcare overhaul which is set to go into effect in 2014. It’s a legislative reality that business owners with 50 or more employees are going to have to deal with. (Businesses with fewer than 50 employees are exempt.) But, how all these changes will affect the healthcare industry “at the ground level” is still unclear, and even with all the checks in place, healthcare could still end up costing small business owners more.
  • The election process only deepened the partisan divide over taxes and fiscal policy. At issue is the imposing fiscal cliff, which is slated to go into effect in January 2013, barring any Congressional action. Going over the cliff will mean some $7 trillion worth of hard to swallow tax increases and spending cuts over the next decade. Here’s a brief summary of some of the key changes:

-Several Bush-era tax breaks are set to expire resulting in a 3 percent increase on individual income tax rates in 2013. Those making more than $388,350 a year, will see a 4.6 percent increase.

-Payroll taxes will increase to 6.2 percent from 4.2 percent. This will be particularly hard for small business owners who are both owners and employees of their businesses.

-The tax break for capital purchases will end. Under Section 179, if you purchased equipment for your business this year, you can deduct half the cost on your taxes right away and it counts as depreciation. In 2013, the depreciation rules will revert to their normal setup allowing you to only deduct the cost of equipment gradually, over the life of the asset.

-The Alternative Minimum Tax (AMT) may tax many middle class Americans, including small businesses. The intention of the AMT is to prevent wealthy individuals from using numerous deductions to significantly drive down their tax obligations so that they are effectively paying too little. But the threshold for those who are subject to the AMT is currently set at $150,000, an amount that will likely affect many middle class workers and small business owners. AMT also affects LLCs, partnerships, and S Corporations.

  • Obama’s re-election also ensures a continuation of quantitative easing- the Federal Reserve’s attempt at reviving the economy by artificially keeping interest rates exceptionally low. Why is this important to small business owners? The critics of quantitative easing, which are not surprisingly significantly Republican, point out that these policies have not helped the economy. Which ever way you hold, the Fed’s moves have an impact on inflation and the overall strength of the dollar- and that is something that can affect many small businesses, especially those who are involved in global purchasing or sales.

In short, though the question of who the next president will be has been answered, there still remain enough questions to keep small business owners” busy” for a while to come.

Are Obama’s Efforts Enough for Small Business?

Last week, the Obama Administration announced that it is taking a series of “immediate actions to help small businesses” survive and thrive in the challenging economic conditions we, as a nation, continue to find ourselves in. But many small business owners are left wondering if Obama’s efforts are either immediate or enough to make any significant difference.

 

 

 

 

 

 

 

 

 

Many are quick to point out that some of the initiatives included in the supposedly new package were part of an already established executive order. Others, maintain that most of these moves will only benefit a relatively miniscule population of small companies, such as construction contractors.

Here’s a quick rundown of the Obama Administration’s small business initiatives:

  • Paying government contractors quicker in hope that “those prime contractors will similarly accelerate payments to their small business subcontractors.”
  • Recommend that Section 179 expensing remains at $250,000 for one year. This will allow small businesses to write off up to $250,000 in capital investments in 2013. If the extension is not approved by Congress then the expensing limit for small businesses is scheduled to decline to only $25,000 in 2013.
  • Re-launch the SBA’s Small Loan Advantage program (now called SLA 2.0). Obama is pushing to raise the maximum amount a small business owner can request for an SBA loan from $250,000 to $350,000. Obama is also seeking to streamline the loan process, so it will be easier and quicker for lenders to extend loans to small businesses.
  • For companies that need surety bond guarantees under $250,000 the SBA will be initiating the “QuickApp” streamlined application. This will reduce paperwork in the hope that small companies, particularly in the construction industry, will have an easier time competing for and winning additional business.
  • Reduce paperwork for SBA’s Disaster Loan Program so that families and businesses will be able to more quickly and easily access support for rebuilding after a disaster.
  • Make it easier for community development entities (CDEs) to bring in private investors for start-ups and small businesses operating in lower‐income communities by revamping the New Markets Tax Credit.

Will these moves truly help small businesses? I’m skeptical; but I guess only time will tell.

(Image credit)

20+ Unbelievable Facts About the National Debt… That Will Make You Cry

Irregardless of which side of the political camp you place yourself, chances are the recent “agreement” to raise the debt ceiling probably brings little comfort, and with good reason. Analysis of the deal reveals that the proposed $2.4 trillion in deficit reduction over ten years is a mere drop in the bucket compared to the national debt which currently stands at $14.3 trillion.

 

But with such astronomical numbers it may be hard to relate to it all in a concrete way. So here is a collection of over 20 unbelievable facts about the national debt and the deficit culled from around the web:

What’s a Trillion, Anyway?

1. If you spend one dollar every second, in twelve days you’d spend 1 million dollars. But it would take you 32 years to spend a billion dollars and more than 31,500 years to spend a trillion. Or you could spend $10 million a day and it would take you a mere 273 years to spend that $1 trillion.

2. A trillion $10 bills, taped end to end, would wrap around the Earth more than 380 times.

3. How big is 14 trillion dollars? 14 trillion $1 bills, laid end to end, side to side, would pave every interstate, highway, and country road in America—twice

*Source: Defeat the Debt

Just Put It On the Tab… A Snapshot of the Yearly US Deficit.

4. According to the US Treasury, as of June 2011, the deficit for FY 2011 is holding at over $970 billion.

5. Projections for the total 2011 deficit peg it at $1.2 trillion dollars.

6. Obama’s most recently proposed budget includes approximately $5.08 trillion in deficits over the next five years

National Debt History 101

7. Before the first session of the U.S. Congress came to an end, the national debt stood at more than $75 million, and since that time it has never been completely paid off.

8. When World War II ended, the debt equaled 122 percent of GDP, or the entire output of the U.S. Economy. In the 1950s and 1960s the economy grew at an average rate of 4.3 percent a year and the debt gradually declined to 38 percent of GDP in 1970. Total US government debt as a percentage of GDP was 94 percent in 2010.

9. When Ronald Reagan took office, the U.S. national debt was only $997 billion. When he left office 8 years later it was $2.6 trillion. During those years, the US went from being the world’s largest international creditor to the largest debtor.

10. Since 1938, the national debt has increased at an average annual rate of 8.5 percent. The only exceptions to the constant annual increase over the last 62 years were the presidencies of Clinton and Johnson. During the Clinton Presidency, debt growth was almost zero

11. With the exception of fiscal years 1998-2001, from 1969 to today, Congress has spent more money than it collected in revenue.

12. The U.S. national debt has more than doubled since the year 2000.

13. Under President Bush: at the end of calendar year 2000, the debt stood at $5.629 trillion. Eight years later, the federal debt stood at $9.986 trillion.

14. Under President Obama: The debt started at $9.986 trillion and escalated to $13.7 trillion, a 38 percent increase over two years.

Anatomy of a Debt Disaster

15. The current National Debt is over $14.3 trillion dollars.

16. Since 2006, the U.S. government’s debt ceiling has been raised six times.

17. The estimated population of the United States is 311,044,622, so each citizen’s share of this debt is $46,152.45 (or about $122,029 per taxpayer)

18. Since September 2007, the U.S. national debt rises at an average of approximately $3.8 billion per day and borrows approximately $5 billion every business day.

19. In 2010, the U.S. government issued almost as much new debt as the rest of the governments of the world combined.

20. The U.S. government has such so much debt to unload that the rest of the world doesn’t have enough money to lend. So, the Federal Reserve is buying most U.S. debt, and don’t think that’s too hard. It’s got a ready supply of cash… straight off the mint’s printing presses!

21. The largest lender to the U.S. government is the American people. We currently own about 42.1 percent of the national debt in the form of Treasury bills and the next largest lender is the government itself with 4.6 trillion or about a third of the total debt.

22. The U.S. government has to borrow 41 cents of every dollar that it currently spends.

Does Obama Really Care About Small Businesses?

For numerous small business owners who are being heavily affected by the current economic turmoil, the road ahead remains tough. Though the Fed (with a lot of help from the media) has been all too happy to call an end to the U.S. recession, the statistics paint a grimmer picture: the rates of unemployment, home foreclosures, and bankruptcy filings are all soaring. This comes as the credit markets remain tight and the cost of health care continues to prohibitively climb.

With all the focus being heaped on government-sponsored economic stimulus, it would seem that the issue of small businesses should be front and center. After all, small businesses in the U.S. account for half of the GDP and over half of the nation’s employment. Shouldn’t the Administration in the White House be concentrating on easing the burden for the nation’s smaller companies?

So far real help has been slow in coming, and this raises an important question: Is President Obama really concerned about the plight of small businesses?

The answer, in my opinion… not enough.

Let’s look at the facts:

In a previous post, I pointed out that government money did not seem to be reaching the small businesses who needed it the most. But underlying this article was the fact that it was Senators John Kerry (D-Mass.) and Olympia Snowe (R-Maine) who worked to secure the 45% funding increase for the SBA’s core small business programs in the first place. Under the President’s plan, several small business loan programs were effectively reduced or nixed completely.

And then there is the recent annoucement that the Administration will ask Congress to raise the loan limit on the 7(a) lending program to $5 million; on the 504 program from $4 million to $5.5 million, and on the microloan program to $50,000.

This was a blatant nod to Republican Senator Snowe, whose support is crucial to the Administration in the area of health care reform- President Obama’s pet project. This seems more like political maneuvering rather than a serious commitment to helping small businesses.

In order to truly hasten an economic recovery, Obama may need to re-evaluate his interests and start showing small business owners and their employees that he cares.

The $787 Billion Recovery Package: How Can Small Businesses Benefit?

After all the politicking, President Obama finally signed into law last week the $787 billion recovery package designed to give a much needed boost to the U.S economy. Contained in the hundreds of provisions and over 1,000 pages of this bill are many opportunities for small businesses. You just need a little patience to sift through it all. To get you started I compiled a summary of a few of the provisions that may benefit many small business owners. (Both the NY Times and the Wall Street Journal have more detailed summaries of the recovery package online.)

  • Increase deduction on capital investments. Businesses can recieve a 50 percent bonus deduction on capital investments made in 2008 that would normally be depreciated over many years. Businesses can choose to accelerate refunds of research and development credits and alternative minimum tax credits in lieu of bonus depreciation.
  • Allow more small business deductions. Allow businesses to deduct up to $250,000 for capital investments made in 2009, with a total cap of $800,000. The limits were temporarily increased by Congress last year for investments made in 2008. Prior to that, small businesses could write-off $125,000 for capital expenditures, with a total cap of $500,000.
  • Delay recognition of certain cancellation of debt income. Allow some businesses to defer tax on income that is recognized when they buy back their debt at a discount.
  • Expand net operating loss carry-back provision for small businesses. Allow small businesses with annual receipts under $15 million to cut taxes by writing off
  • Expand the tax break for small business stock sales. Allow small businesses to exclude up to 75 percent of the gain from the sale of some stock held for more than five years. 
  • Develop business in depressed communities. Increase funding for state-wide programs that provide incentives for businesses to locate in economically distressed communities.
  • Expand use of industrial development bonds. Allow small-issue industrial development bonds for “creation of intangible property” in the next two years. Industrial development bonds are tax-exempt bonds issued by a state or local government to finance manufacturing or production of “tangible personal property.”
  • Incentive for advanced energy investment. Establish a new 30 percent investment tax credit for manufacturers of advanced energy property, which may include technology for the production of renewable energy, energy storage, energy conservation, efficient transmission and distribution of electricity, and carbon capture and sequestration.
  • Support battery manufacturing. Provide grants to manufacturers of advanced battery systems and car batteries in the United States.

Aside from these provisions, several other provisions may indirectly effect small businesses. Some examples include: improvement in transportation and clean energy initiatives, the repair of facilities on public lands and parks, the repair and modernization of public housing units as well as abandoned and foreclosed homes. Small businesses could benefit by securing government contracts directly or assisting the bigger companies that secure them.

Image credit: Flickr user

An Obama Presidency = A Headache for Small Businesses?

[image source: Anthony Baker]

With a sputtering economy and an uncertain future, issues such as tax reform, health insurance, and worker’s benefits are weighing heavy on the minds of entrepreneurs and small business owners. For many, how the candidates for the US Presidency stand on these issues alone can be the deciding factor come voting day.

So who is the favored among small business owners?

Though both Obama and McCain have been pledging their support to established and up-and-coming small businesses, a close look at their policies reveals sharp differences in strategy and mindset.

If elected, Obama pledges to eliminate the capital gains taxes on start-up and small businesses as well as offer a $500 credit to self-employed small-business owners to offset the self-employment tax. He also plans on freezing the dreaded estate tax rate at 45% .

To encourage entrepreneurship, Obama wants to further develop a network of business incubators in communities throughout the nation with an emphasis on disadvantaged neighborhoods.

Many of Obama’s policies are actually more focused on the workers themselves. He plans on raising the national minimum wage from $6.55 to $9.50 an hour and requiring all employers to automatically enroll workers in 401(k)s or IRAs. Obama would further require all employers to either offer a health plan, contribute money to a worker ‘s health costs, or pay a percentage of payroll to a national public program. Obama also supports the right of workers to bargain collectively and strike without fear of losing their jobs.

While many of Obama’s policies may be good for the average worker, it puts an added strain on businesses that are already seeing their bottom lines erode as the price of commodities and healthcare continues to skyrocket and the financial markets limp along. Such a strategy can make it harder for small businesses to hire and hold on to talent.

On the other hand, McCain’s platform appears more friendly to small businesses.

He plans on granting small businesses an immediate deduction on the cost of new equipment and technology purchases. He also wants to establish a permanent tax credit equal to 10% of the wages spent on R&D. Further tax reforms include: Reducing the corporate income tax rate to 25% from 35%; cutting the estate tax rate to 15% and increasing the exemption to $5 million.

In the area of healthcare, McCain pledges to make healthcare coverage less employer-centric by issuing tax credits allowing individuals to purchase personal, portable health insurance that will stay with the person even with a change in job.

McCain also supports a ban on Internet taxes as well as any new cell phone taxes.

According to a recent survey conducted by Suffulk University, many small business owners feel that McCain will better suit their interests.

Who will you be voting for in November?