Small business wary of government meddling

May 23, 1994|By John E. Woodruff | John E. Woodruff,Sun Staff Writer

Rising interest rates, still-unknowable employee health-care costs, bills in Congress that would ban replacements for striking workers, proposals for tighter safety regulations -- even amid recovery, the view of today's U.S. economy from Main Street can be scary.

Or at least the view from Main Street's man in Washington can be.

"Small businesses in America are more optimistic about the economy right now than they've been in a long time, but it's a guarded optimism because there are so many proposals for government intervention in their operations. So a lot of people are holding back on hires or investments they would like to make," said Jack Faris, president of the National Federation of Independent Business.

"Surveys of our members show optimism we haven't seen in years," but when small-business people come to meetings they bring along feelings that are not measured in the surveys, he said.

"Angry. Scared. They come to meetings mad," because, just as the economy is recovering and giving them hope of greener times, they may face much higher costs from health care reform and new labor laws and regulations, Mr. Faris said.

Mr. Faris' association has 600,000 member businesses with an average of five employees and $275,000 in annual revenues. The owners take home an average of $38,000-$40,000 a year.

He grew up in a Florida small-business family -- his father ran a Pensacola gas station and his mother sold cosmetics. He spent most of his adult life in banking in Nashville, Tenn., and with an international construction company.

His small-business experience consists of 12 years operating a marketing and management consulting firm, mainly serving small and independent businesses.

He gave that up in May 1992 to assume the NFIB presidency, a full-time job that keeps him in Washington lobbying and on the road persuading state-level politicians and courting members most of the year. He was interviewed by The Sun during a recent speaking trip to Baltimore.

The lobbying job has taught him that America's business community is not a single entity.

"Remember that scene at the State of the Union address, when Mrs. Clinton sat with the head of General Motors on one side and the head of the AFL-CIO on the other? Well, when big business, big government and big labor get together, that's bad business for small business," he said.

"For General Motors and the Big Three automakers, the benefits from the Clinton health care plan are in the billions, but for small businesses the same plan means laying off employees you've trained and now won't be able to keep because of the higher costs," he said.

The automakers' gains would be huge because the Clinton plan would relieve them of health payments for retirees who have broad coverage under plans negotiated by their unions, and some estimates are that the book value of GM alone could rise by $28 billion, he said.

NFIB membership surveys show steady increases in the numbers of members who expect improved sales, think this is a good time to expand, plan to add employees and plan capital expenditures, he said.

But this optimism is undercut not only by the Clinton health plan and other threats of government intervention, but also by rising interest rates.

"Small businesses always pay the highest rates, and some of them end up using credit cards to borrow money, but they still are concerned about rising interest rates because of what they might do to the economy. Everyone is nervous now that the Federal Reserve will be too aggressive against inflation and choke off the recovery with higher rates," he said.

It's not only diverging stakes in proposals such as the Clinton health plan that divide small businesses from big businesses, Mr. Faris said.

"A big business runs pretty much by the numbers, by the book. But owning your own business is a much more emotional thing -- you do it for the independence, the freedom, even if part of that is the freedom to have a knot in your stomach every Thursday night, not knowing whether you can cover your payroll on Friday," he said.

"That's why small businesses get much more excited every time the government starts talking about taking away some of that freedom, because these decisions are being made by people who've never signed the front of a payroll check but have only endorsed the backs of their own paychecks from the government or a university," he said.

The antidote is to get active in politics, Mr. Faris tells NFIB members, both in person and through the association's publications.

A Republican with a manner more resembling a preacher than a lobbyist, Mr. Faris was campaign finance director for Tennessee Gov. Lamar Alexander in 1978 and director of the Republican National Finance Committee from 1978 to 1981. He preaches that the way for small-business voices to be heard in Washington is to support congressional candidates who have experience or understanding of the entrepreneur's situation.

"We are telling our people that if they don't see candidates who understand already running, they should find some, and if they ++ can't find some, they should consider getting into it themselves," he said.

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