Minimum Wage -- Major Issue in the States and in Congress

Changes in the minimum wage are coming for firms in 24 states as of January 1, 2007 or other dates, and it's an issue on the fast track for the Congress when it convenes in January.

WBO's should prepare now to be able to respond to wage increases as they come. It appears that the political battle over the increases is unlikely to be won. The Congress is very likely to pass an increase, and, even if the President were to veto it, additional action at the state level is likely. And, given the competitive issues likely to come from having different minimum wage rates in different states, it can be argued that having a single federally set minimum wage would be preferable from a business perspective.

Here's an update on changes in the states that national employment law firm JacksonLewis passed along to clients following the fall elections:

Voters went to the polls in six states this Election Day and overwhelmingly approved ballot initiatives increasing their respective state minimum wages to amounts higher than the $5.15 per hour provided under the federal Fair Labor Standards Act. Voter sentiment was consistent with recently enacted legislation in other jurisdictions.

The approved Election Day ballot initiatives are:

Arizona – Established a state minimum wage law with a minimum wage of $6.75 per hour effective January 1, 2007, with increases each year for the cost of living;

Colorado – Raised the state minimum wage from $5.15 per hour to $6.85 per hour effective January 1, 2007, with increases each year for the cost of living;

Missouri – Raised state minimum wage from $5.15 per hour to $6.50 per hour effective January 1, 2007, with increases each year for the cost of living;

Montana – Raised state minimum wage from $5.15 per hour to $6.15 per hour effective January 1, 2007, with increases each year for the cost of living;

Nevada – Raised state minimum wage from $5.15 per hour to $6.15 per hour effective November 28, 2006. However, if the employer makes health insurance available for the employee and the employee's dependents at a total cost to the employee for premiums of not more than 10 percent of the employee's gross taxable income from the employer, the minimum wage payable to such employees remains $5.15 per hour; and

Ohio – Raised its state minimum wage from $5.15 per hour to $6.85 per hour effective January 1, 2007, with increases each year for the cost of living.

In addition to these changes established by voter referendum, California, Connecticut, Delaware, Florida, Hawaii, Massachusetts, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont and Washington have passed measures increasing their respective state minimum wages effective January 1, 2007. Moreover, Arkansas, Maine, Michigan, New Jersey and West Virginia recently enacted and/or implemented statutory increases to the minimum wage with effective dates other than January 1, 2007.

NAWBO Testifies On Procurement Before Congress

NATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS® TESTIFIES BEFORE CONGRESS ON LACK OF FEDERAL BUSINESS FOR WOMEN ENTREPRENEURS

(McLean, VA)—On October 3, 2006, the National Association of Women Business Owners (NAWBO) testified today at a special in-district hearing of the Senate Committee on Small Business and Entrepreneurship to look into the struggles faced by women-owned small businesses vying for federal contracts. The hearing—which was the result of NAWBO working constructively with the committee for more than a year—examined the progress being made under P.L. 106-554, which stipulates that five percent of all federal contracts be awarded to small businesses owned by women. The hearing was held on the campus of George Mason University in Fairfax, Virginia.

Erin M. Fuller, CAE, NAWBO's Executive Director, testified that this failure to achieve the 5 percent contracting goal has "cost" women business owners more than $16 billion in lost revenues in just the last three fiscal years. Women business owners cannot afford to wait any longer for the government to achieve contract equity. It is not only necessary but urgent for the SBA to implement fully and immediately the restricted competition program for women owned small businesses authorized by Congress in 2000. This program was envisioned by Congress as an important tool in helping to reach the 5 percent contracting goal established more than a decade ago.

Carol Kuc, NAWBO's president and president/CEO of Complete Conference Coordinators in Naperville, Illinois, outlines the situation as "[t]here is currently a $5 billion dollar a year difference between the roughly 3 percent of federal contract dollars that women-owned businesses currently receive and the 5 percent goal established more than six years ago." And she added, "While the long-delayed 8(m) program discussed in the regulations is a good first step, it certainly is not the only solution for correcting the disparity between the minimal 5 percent goal and measurable results."

"Procurement continues to be one of NAWBO's top advocacy issues for our members," adds Kuc. "Our members want and need procurement opportunities with the Federal Government in order to build world-class businesses," she continued. According to Kuc, "Many of our NAWBO members report that they no longer bother to bid on federal contracts because they find it is a waste of their time."

Among other recommendations Fuller noted, NAWBO urges the SBA to develop rules that mandate federal agencies that continue to fall below the Women Owned Small Business 5 percent goal (and other higher goals we expect will be established based on disparity study findings) to participate in the 8(m) set-aside program or provide other commitments or expanded opportunities for Women Owned Small Businesses to secure contracts with their agencies. Stringent success measurement criteria should be set and the program should be evaluated each year as to whether Women Owned Small Business goals were met. To view NAWBO's full testimony and NAWBO's Procurement Task Force Report, which was entered into the congressional record today, visit www.nawbo.org

For more information on NAWBO or to schedule an interview with NAWBO policy experts, please call 1-800-55-NAWBO.

About NAWBO: Founded in 1975, NAWBO propels women entrepreneurs into economic, social and political spheres of power worldwide. More than thirty years later, NAWBO is still the only organization that solely represents the interest of women entrepreneurs in all industries. The organization's mission is to strengthen the wealth-creating capacity of its members and promote economic development; to create innovative and effective change in the business culture; to build strategic alliances, coalitions and affiliations; and to transform public policy and influence opinion makers. Visit www.nawbo.org for more information.

Blogging's Not Just for Public Policy; Use it to Grow Your Business and Your Chapter

Here's a great article about how blogging can fit in the marketing plan/services offered by your business.

And, in the article is a reference to a blog that's helping a group of women business owners in Central New York connect with each other and share their events/stories with others. Women Business Connection Blog is a good example of how a NAWBO chapter could use a blog to get information about about members and events.

Blogging is free. Like the WBO Connection Blog and this one, you can set a blog up in minutes using Blogger or one of the other free services online.

Try it. You might like it.

Now, go out there and make some $$$.

NAWBO® Says It's Time for Strong Leadership; Files Comments with SBA; Asks New Administrator for Meeting

The National Association of Women Business Owners® has taken two steps designed to improve the performance of the federal government's procurement programs in directing federal contracts to women-owned businesses.

NAWBO filed comments on the proposed rules for the long-delayed women-owned small business contracting program that was authorized by Congress in 2000, but has yet to be implemented.

To read the comments, click here.

And, NAWBO wrote the new SBA Administrator asking him and the SBA to make a renewed commitment, and apply a sense of urgency, to: (i) achievement of the Congressionally mandated 5% federal procurement goal for women-owned small businesses (WOSBs); and (ii) full implementation of the Congressionally authorized restricted competition program for WOSBs before the end of FY06.

"Procurement continues to be one of NAWBO's top advocacy issues for our members," said Carol Kuc, NAWBO's president and president/CEO of Complete Conference Coordinators in Naperville, Ill., in the comments filed on July 17, 2006 on behalf of NAWBO's 8,000 members from across the country. "Our members want and need procurement opportunities with the Federal Government in order to build worldclass businesses," she continued. According to Kuc, "Many of our NAWBO members report that they no longer bother to bid on federal contracts because they find it is a waste of their time."

Kuc pointed out that "[t]here is currently a $5 billion dollar a year difference between the roughly 3% of federal contract dollars that women-owned businesses currently receive and the 5% goal established more than six years ago." And she added, "While the long-delayed 8(m) program discussed in the regulations is a good first step, it certainly is not the only solution for correcting the disparity between the minimal 5% goal and measurable results."

The comments were based on the findings and recommendations of NAWBO's procurement task force. To read the full report, click here.

SBA Issues Proposed Rules for Women Business Owner Federal Set Aside Program

After more than six years of delays and a lawsuit by the US Women's Chamber of Commerce, the SBA finally published proposed rules for implementing the restricted competition program for women owned small businesses. Note that the government's failure to get this program moving is one of the reasons why the feds can't meet the 5% goal for wbo procurement, costing us $6 billion a year in lost revenues.

The SBA summarized the proposal:
The U.S. Small Business Administration (SBA) proposes to amend its regulations governing SBA's government contracting programs. This proposed rule would add a new part to implement the Women-Owned Small Business (WOSB) Federal Contract Assistance Program authorized under the Small Business Reauthorization Act of 2000, Public Law 106-554, December 21, 2000. Section 811 of the act authorized contracting officers to restrict competition to eligible WOSBs for certain federal contracts in industries in which SBA has determined that WOSBs are underrepresented or substantially underrepresented in federal procurement.

The deadline for comments on the SBA's proposals is July 17, 2006. Comments can be submitted electronically.

The SBA proposals conflict with some of the recommendations of the recent NAWBO Procurement Task Force Report.

Among other things, the SBA has not taken full advantage of the authority given it in the authorizing legislation to approve existing certification programs like WBENC and NWBOC as meeting certification requirements for the program. The NAWBO Procurement Task Force specifically recommended such an approach to streamlining certification requirements.

Another concern highlighted in the Task Force report is that, unless the regs are carefully written, receipt of a single federal contract can disqualify a woman business owner from further participation in the set aside program by moving her above revenue limits established in the SBA definitions of "small" business.

NAWBO's Public Policy Forum will be working with WIPP and others to submit comments on the proposed rules. If you have ideas/suggestions, you can post them in the comments to this post.

Kirsten Osolind, chair of the Forum has a good post on this topic on the re:invention blog here.

Woman Business Owner Writes Informative analysis of Health Insurance Bills

The debate on the small business health plans legislation isn't over yet. Here's a link to an interesting article by a woman business owner in Lynchburg, VA, published recently in the Blue Ridge Business Journal in which NAWBO's support of this legislation is cited.

Read what fellow small business owners on both sides of the issue say about pending federal legislation to address health insurance cost issues and about the differences in the House Association Health Plans (AHP) bill and the senate Small Business Health Plans (SBHP) bill.

"There is confusion," says Joyce Waugh, vice president of public policy for the Roanoke Regional Chamber of Commerce. "That is part of the complication. The House bill has more questions than the Senate bill. If you get health insurance and it doesn't cover anything, it doesn't help you. Part of that is that amendments go on and the bills keep changing."

NAWBO supports all federal legislation designed to reduce health insurance costs for small business owners and our employees. Let's hope that the Congress will pass something that will meet this objective.

Federal Estate Tax Repeal -- WBO's Should Look Closely at the Fine Print

Most folks don't understand that the much ballyhooed estate tax repeal carries a nasty surprise for smaller estates. Writing in the Washington Post today, Allen Sloan, the Post's Business Columnist and Newsweek's Wall Street editor, points out the negative impact of the change from stepped-up basis to carry-over basis for what he calls the estates of the "small rich."

Under current law, when someone dies, the estate pays a tax if it's over a certain size, but the tax basis of inherited property for the heirs is the market value at the date of death (stepped-up basis). Under the law if estate tax repeal is made permanent as now drafted, the estate won't pay a tax if it's small enough but the tax basis of inherited property for the heirs will be the same as the tax basis for the person from whom they inherited (carry-over basis).

Here's Sloan's example that illustrates the adverse impact of this change coupled with current and future exemptions:

Under current law, when you die your heirs get stepped-up tax basis. That means the assets you bequeath are valued for income-tax purposes at what they were worth the day you died -- not what you originally paid for them. Say you paid $50,000 for stock that's worth $500,000 when you die. Your heirs can sell it for $500,000 and owe no tax on the $450,000 gain. As long as your total estate doesn't exceed the exemption limits, there's no estate tax, either.

Now watch. Under the 2009 rules, estates of up to $3.5 million ($7 million for a married couple) would be exempt from federal estate tax. The tax rate on assets above that level would be 45 percent. Inheritors would be able to step up the basis of $3.5 million (or $7 million) of inherited assets to their value the day they inherit them. Fast-forward to 2010, when the estate tax is repealed. Yes, the estate tax would be gone. But heirs would be able to step up only $1.3 million in assets to their value on the day of death. (Don't ask why; that's just how it is.)

Assets beyond $1.3 million would be valued for tax purposes at carry-over basis -- their cost (for income-tax purposes) for the person who died. So any estate with $1.3 million to $3.5 million in assets ($2.6 million to $7 million for a married couple) is worse off under full repeal in 2010 than it would be in 2009. Inheritors in the $1.3 million-to-$3.5 million range would face higher taxes if they sold inherited assets than they would under the 2009 rules. At the very least, they would have complicated paperwork to deal with. They'd be much better off inheriting in 2009 than in 2010. But if you're dealing with an estate of $3.5 billion rather than $3.5 million, you'd be far better off inheriting in 2010.

How many folks will get the fuzzy end of this lollipop?

Sloan says that a Joint Tax Committee study estimates that only 7500 people will have estates over $3.5 million in 2009, but 63,900 will have estates between $1.3 and $3.5 million.

Now, if we do nothing and we revert to the law before temporary estate tax repeal, the estate tax exemption will go back to $1 million in 2011 which will hurt a lot of small businesses and family farms. None of us should want that to happen.

But, as Sloan says, that doesn't mean that our only choice is to make permanent the 2010 rules that will subject 63,900 estates to higher taxes while helping out only the 7500 people with mega-estates.

His recommendation?

It seems to me that adopting the 2009 rules, indexing the exemption for inflation and allowing stepped-up basis would get us back to the original intent of the estate tax. Taxing 7,500 estates a year doesn't seem unfair. And it would generate significant revenue.

That may not be the "right" solution for everyone, but every woman business owner should look carefully at how her estate would or would not be affected by the change in the rule governing the tax basis of inherited property before signing on to support the current proposal to make the 2010 estate tax rules permanent.

Retirement Security for Life Act, S381 and HR819

NAWBO's coalition partner Women Impacting Public Policy (WIPP) is encouraging women business owners to write to Congressman Eric Cantor to thank him for introducing the Retirement Security for Life Act (S. 381/H.R. 819).

If this bill were to become law, many individuals would be eligible for an average $5,000 exclusion on their tax returns and they would be encouraged to invest in a steady paycheck for life. The bill would provide a 50 percent tax exclusion on the income from a non-qualified lifetime annuity, a strong tax incentive for people to secure a steady stream of income for retirement, particularly if you sold your business and put that money into an annuity to save for retirement.

WIPP is a member of Americans for Secure Retirement, an organization that supports this bill and other measures to assure that annuities receive more favorable tax treatment resulting in more people choosing this route to securing their retirement. There is an action page on the ASR website through which you can send comments on this issue to your congressional representatives.