Small business insurance and the economic recovery

This week in May has been National Small Business Week as our country does its best to honor the entrepreneurs who are trying to pull us out of recession. Except this event has not exactly made the headlines. Instead our newspapers and magazines have been concentrating on poor employment numbers, house prices continuing to fall, and LinkedIn demonstrating the continuing bubble in tech stocks. This has been the trend for the last few years. Big businesses grab the headlines and, although politicians say they have the interests of small business to heart, there’s no one on Capitol Hill to speak for small business interests. The money is not there to pay for the lobbying to give them the priority they deserve. Why do they deserve priority?

It may sound something politicians might say but small businesses really are the backbone of our economy. If you look at the employment statistics, two out of every three jobs are created by the small business sector. In other words, Washington is depending on small businesses to pull the country out of the recession but doing very little to help them. Take healthcare as an example. Although the federal government has given tax credits to small businesses to help them pay for health plans, the lobbyists for the insurers have been bending Washington’s ear. As a result, the proposals for the exchanges that would have helped small businesses find affordable cover for their employees have been seriously watered down. As the proposed rules currently stand, insurers would be free to continue increasing the premium rates every year as if there was no effective competition.

It’s the same when it comes to credit and loans. Even though many large business have not been performing well, the banks continue to favor them. There should be a move to direct loans to small business, whether through state administered or community banks. Anything is better than allowing the Wall Street bankers to continue strangling small businesses for funds. Yet all the partnership banking proposals around the country are being opposed by the central banks, and Washington does not hear the voice of small businesses.

It should not be this way. Federal government should be standing up for small businesses and encouraging them to expand. This could be encouraged by liberalizing the federal contract program so that more work could be granted to small business. Federal and state government should also be revitalizing the education service to improve the flow of skilled people into the workforce. The economic recovery cannot be real unless we plan for the future development of the workforce.

In all this, more should be done to keep small business insurance affordable. Although there was a gesture at subsidizing the health insurance costs, insurers have been quick to increase their rates again this year. The Insurance Commissioners and business associations should do more to control premium rates. Just because small businesses have been weathering the storm does not mean they have suddenly become chickens fit for plucking. Small businesses are entitled to respect and some degree of protection from exploitation by the small business insurances companies. If Washington is serious when it looks to small business to rescue the economy, it should be supporting small businesses.

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