The contentious 2016 presidential race is generating anxiety among small business owners and could create problems for job creation and domestic hiring in the near future, according to a series of business sentiment trackers released this week.
Bank of America’s Small Business Owner Report on Tuesday showed more than two-thirds of roughly 1,000 business owners surveyed were at least “somewhat” concerned about how this year’s presidential election would impact their respective businesses.
Strictly from a professional standpoint, about 68 percent of those surveyed said taxes were among their primary concerns, while 67 percent cited anxiety over the broader economy and job growth. About 55 percent said they were worried about how the election would impact health care policy.
“Anxiety is high regarding the impact of the fall elections, the effectiveness of U.S. government leaders and health care costs, possibly explaining why small businesses are taking a wait-and-see approach before making plans for hiring and growth,” Robb Hilson, small business executive at Bank of America, said in a statement accompanying the report. “Nearly 4 out of 5 (79 percent) small business owners express concern over the effectiveness of U.S. government leaders.”
Those results aren’t far off from a separate survey and barometer released Monday by Capital One, which showed that 1 in 4 small business owners were more worried about the elections than about “competition, hiring and retaining talent and the regulatory environment.”
And much like the Bank of America report, chief among their concerns were tax policies, economic growth and health care costs.
“Now is a critical time for small businesses as the country anticipates a change in leadership and new opportunities and challenges, such as market dynamics and new regulations and tax laws, which can have a significant impact on business results,” Keri Gohman, head of small business banking at Capital One, said in a statement accompanying the report.
America’s base of small businesses has been instrumental to the labor market’s 66 consecutive months of job growth. Small businesses with less than 50 employees accounted for 51 percent of the jobs created during the third quarter of 2015 — the most recent period for which data was available from the Bureau of Labor Statistics — while companies with more than 1,000 employees accounted for only about 20 percent of the country’s gross job gains.
Statistics from the Census Bureau also showed that small businesses accounted for more than 96 percent of all companies in the U.S. and employed more than 44 percent of all working Americans in 2013.
And while it’s not necessarily unusual for employers and financial markets to get spooked during election years, it’s worth noting how pessimistic some of these small business leaders have become. Only 29 percent said they think the national economy will improve over the next 12 months — down sharply from the 48 percent who said the same last year, according to the Bank of America study.
The Capital One report, meanwhile, found that only 41 percent of those surveyed indicated business conditions were either “excellent or good,” down notably from the 50 percent who said as much in 2015. The number of businesses reporting “poor” conditions ticked up 4 percentage points to 19 percent.
That pessimism bodes poorly for job growth, as cynical employers are generally less likely to increase payrolls going forward. Only about 22 percent of the Bank of America respondents and 26 percent in the Capital One analysis said they’d look to hire new employees in the near future.
“The majority (59 percent) plan to keep the same number of employees over the next 12 months, perhaps suggesting small business owners are waiting until after the election to reassess hiring plans,” the Bank of America study said.
Small business owners historically have favored tax policies and governmental oversight that don’t come with steep regulatory compliance costs, since they typically have fewer resources to expend on efforts to adhere to government standards than large companies.
But there isn’t a definitive partisan split when it comes to whether a Republican or a Democrat would be better equipped to assist small business owners.
“I think [GOP front-runner Donald Trump] has a really good point. We have to make sure we have a president who’s strong and tough if a foreign country is not promoting free trade,” Evan Singer, president of small business lending company SmartBiz, told U.S. News in an interview earlier this year. “I think [Democratic front-runner Hillary] Clinton appears to have the right experience to negotiate those waters. But they both make some very good points.”
It’s worth noting that analyses published earlier this year by the Tax Foundation estimated that Clinton’s tax policies would shrink 10-year gross domestic product growth by about 1 percent, while Trump’s would expand domestic growth by 11.5 percent if passed in full. Clinton’s plan would shed about 300,000 jobs, while Trump’s would add about 5.3 million.
Clinton’s plans, however, would increase government revenues by about $191 billion, while Trump would add $10 trillion to the federal deficit of a country already more than $19 trillion in debt.
And while candidates’ policy solutions can diverge significantly, Singer says small business owners have welcomed specific proposals like these with open arms, even if they don’t necessarily agree with them.
He says the “rhetoric” of politics isn’t particularly helpful. Rather, substantive policy plans can help small business owners make the decisions that are best for them — and potentially alleviate some of the anxiety that could be weighing on their business outlooks and future hiring plans.
“Small businesses are focused every day on growing, and they don’t necessarily need the extreme rhetoric we’re hearing in today’s election,” Singer says. “It’s really around the concrete programs. If we could have a candidate say, ‘This is what I’m going to do,’ versus the rhetoric, that would be extremely helpful [to business owners].”
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Presidential Election Vexing Small Business Owners originally appeared on usnews.com
