NFIB Weekly News
NFIB Weekly News
Leading the News
Small Businesses “Hungry For Tax Reform.” (06/27/2017)
CNBC (6/22) reported that “taxes have long ranked as a top issue for America’s small businesses, many of whom file as pass-through entities, combining business and personal income and, as a result, sometimes paying a higher effective rate.” CNBC added, “In the National Federation of Independent Business’ 2016 ‘Small Business Problems and Priorities’ study, federal taxes on business income ranked as the No. 3 issue behind the cost of health insurance and unreasonable government regulations.” In addition, the article stated that “the first-ever CNBC/SurveyMonkey Small Business Survey in June found that taxes were the No. 1 issue for 25 percent of the more than 2,000 businesses surveyed.” CNBC wrote that “House Speaker Paul Ryan also spoke out in favor of overhauling the tax code this week at the National Association of Manufacturers Summit Tuesday, pointing out the uneven playing field small businesses that file as pass-through entities find themselves on, compared to their corporate counterparts.”
Rate Hike Shows Fed Sees Stronger Economy. Business Climate
Media reports cast the Federal Reserve’s decision to raise interest rates as a good sign for the economy. The Los Angeles Times (6/14, Puzzanghera, Lee) reported that “Federal Reserve policymakers” implemented “their third small hike in a key interest rate in six months, a move that will push it above 1% for the first time since the 2008 financial crisis.” It was “another validation of the recovery from the Great Recession.” The Wall Street Journal (6/14, Timiraos, Subscription Publication) ran a similar analysis of the Fed’s motives, and the New York Post (6/14, Dugan) reported the Fed made its decision “as unemployment in the US has continued to fall and consumer confidence has risen.” Likewise, Business Insider (6/14, Oyedele) said the Fed was “signaling that it believes the economy is healthy enough to withstand tighter financial conditions,” Reuters (6/14, Dunsmuir, Schneider) that it cited “continued US economic growth and job market strength,” the New York Times (6/14, A1, Appelbaum, Subscription Publication) that it demonstrated “confidence in the health of the American economy,” and the Washington Post (6/14, Swanson) that it sent “a message of confidence in the strengthening of the US economy.” The Post adds that the Fed also “laid out plans to begin rolling back the more than $4 trillion balance sheet it accumulated in an effort to prop up the economy after the financial crisis.”
Small Business Optimism Remains Strong, But Hiring Qualified Workers Still A Challenge.
The NFIB reported that its May 2017 Index of Small Business Optimism remained at its April level of 104.5, meaning the index has now seen six months of historically-high optimism readings from US small business owners. NFIB President and CEO Juanita Duggan said, “The remarkable surge in optimism that began last year right after the election shows no signs of slowing down. Small business owners are highly encouraged by the President’s regulatory reform agenda, and they remain optimistic there will be tax reform and health-care reform. This is a policy-driven phenomenon.” For the May report, a majority of small business owners, 59%, reported hiring or attempting to hire workers. However, 51% indicated they had difficulty finding qualified workers. NFIB Chief Economist Bill Dunkelberg noted, “The tight labor market has been a persistent problem for small business owners for the past several months, and the problem appears to be getting worse.” He added, “It’s forcing small business owners to increase compensation, which we’re seeing in this data, to attract new workers and keep the ones they have.”
Data Show Small Businesses Added More Jobs In May; Finding Qualified Workers A Challenge.
The National Federation of Independent Business (6/2) reported that its latest jobs data indicates that in May, US small businesses continued to add jobs at an average rate of an additional 0.34 workers per company. Job growth was “powered mainly by stronger hiring plans and job openings.” NFIB Chief Economist Bill Dunkelberg said, “Small business owners are starting to convert their optimism into action. It’s a sign of a healthier economy.” At the same time, the data indicated that “when it came to finding qualified workers, 51 percent of small firms said they came across ‘few’ or ‘none.’” Dunkelberg said the lack of qualified workers is forcing small businesses “to increase compensation to stay competitive and hire temporary workers, but they are still having a difficult time increasing prices to absorb the additional costs.”
US Economy Grew More Than Initially Reported In First Quarter.
Bloomberg News (5/26, Jamrisko) reported the Commerce Department announced the US economy grew in the first quarter at an annualized rate of 1.2 percent, revised upward from 0.7 percent. Bloomberg said the quarter’s growth “wasn’t so miserable after all,” though it was “a relatively weak start.” The Wall Street Journal (5/26, Leubsdorf, Subscription Publication) said the report shows growth was stronger that initially reported but still modest. Barclays economist Michael Gapen commented, “The recovery continues to be perhaps uninspiring, but it’s awfully durable.”
Consumer Sentiment Remains High.
The Wall Street Journal (5/26, Hufford, Subscription Publication) reported the University of Michigan’s consumer sentiment survey found it at 97.1 for the last full week of May, up from 97 in April, but down from 97.7 at the beginning of May. The Journal said the rating has continued to be high since President Trump’s election, compared to last October when it was at a two-year low.
House Leaders Seeking Bipartisan Deal On Debt Limit. (06/27/2017)
Reuters (6/23, Gibson, Becker) reported Congressional leaders are “quietly working on a bipartisan deal to raise the U.S. debt ceiling within weeks, hoping to prevent the difficult debt issue from snarling a budget fight to come in September, a senior Democratic budget writer said.” John Yarmuth, top Democrat on the House Budget Committee, explained that “there is bipartisan interest in raising the debt limit, a job traditionally assigned to the committee, before August.” The piece noted Treasury Secretary Steven Mnuchin “last month moved the target deadline for action to September from October, saying tax receipts are coming in slower than expected.”
All Major Banks Pass First Round Of Fed Stress Tests. Small Business Marketing
The AP (6/22) reported that the Federal Reserve announced “that all of the 34 largest US banks are fortified enough to withstand a severe US and global recession and continue lending.” The first round of the “annual ‘stress tests’ showed that as a group, the 34 big banks have gained strength thanks to a steadily recovering economy.” However, the Wall Street Journal (6/22, Tracy, Demos, Subscription Publication) reported that in the past, some banks have shown strong capital ratios in the first round, but failed in broader second round of assessment. The New York Times (6/22, Corkery, Subscription Publication) said that “this year’s fictional challenges for 34 banks included unemployment of about 10 percent and commercial real estate losses of 35 percent.”
Trump’s Approach To Regulation Seen Boosting Several Industries.
The Washington Times (6/15, Miller) reported in an analysis that rolling back what President Trump calls “job-killing regulations” has been “the only area” where he “has chalked up big wins on his economic agenda so far,” but “that has been enough to quickly bolster confidence across the manufacturing sector and help revive the coal industry.” This approach to regulations “has had the most immediate impact on the coal industry after Mr. Trump revoked Obama-era rules to combat climate change” as “Corsa Coal Corp. opened its first new deep mine in Pennsylvania in six years” last week and Alpha Natural Resources “announced the opening of a new mine in West Virginia.”
Cohn To Lead Search For Next Fed Chair.
The Wall Street Journal (6/13, A1, Timiraos, Davidson, Subscription Publication) reported in a front-page story that as the White House begins its search for the next Fed chair, President Trump’s economic adviser Gary Cohn, who some believe could be a candidate for the job, will lead the effort. The Journal pointed out that in an April interview, Trump would not rule out reappointing current Chairwoman Yellen, but adds that many observers say that is unlikely.
A New York Times (6/13, Granville, Subscription Publication) analysis compared the Trump-Yellen relationship to President Lyndon B. Johnson’s clashes with Fed Chairman William McChesney Martin, calling it “a conflict from the 1960s with echoes in the present day, as President Trump’s campaign talk of robust tax cuts, job growth and economic expansion is bumping up against calls by” Yellen “for a cautious rise in interest rates, lest inflation get out of control.”
Economic Growth A “Bright Spot” For Trump Administration.
The Hill (6/11, Elis) reported, “The economy is emerging as a bright spot for” the Trump Administration, as “the S&P 500 is up more than 12 percent since Election Day, unemployment has reached a 16-year low and economic growth in the coming year is expected to reach 2.3 percent, more robust growth than the 1.6 percent it grew in 2016.”
Mnuchin Proposes “Sweeping Changes” To Dodd-Frank.
The Los Angeles Times (6/12, Puzzanghera, Koren) reports that Treasury Secretary Mnuchin has “proposed sweeping changes” to the Dodd-Frank law, “including a major reduction in the power of the Consumer Financial Protection Bureau and other rollbacks long desired by Wall Street.” In a report requested by the President, Mnuchin “recommended reducing oversight of large financial institutions, providing even more regulatory relief for smaller banks and loosening new mortgage restrictions designed to prevent a repeat of the subprime meltdown.” It was, the Times says, the Administration’s “first formal salvo in what’s expected to be a long and complex process involving Congress and federal agencies to try to scale back regulations that Republicans have complained are harming banks and stifling economic growth.” The Wall Street Journal (6/12, A1, Tracy, Davidson, Subscription Publication) reports in a front-page story that the banking industry has sought many of the changes in the proposal for years.
Google To Stop Scanning Emails For Gmail Ads. (06/27/2017)
Advertising Age (6/23) reported Google will no longer use ads that scan users’ Gmail contents. The controversial “ads based on scanned email messages drew lawsuits and some of the most strident criticism the company faces, but offered marketers a much more targeted way to reach consumers.” Promoted messages inside the free version of Gmail “will now be targeted with other personal information Google already pulls from sources such as search and YouTube.”
Facebook Video Ad Viewability Rates Are As Low As 20 Percent. Wages and Benefits
Digiday (6/26, Davies) reported Facebook has “bowed to pressure from ad buyers and started letting third-party auditors check its numbers.” Some agencies that have started using the new auditing capabilities “have been stunned to see viewability rates on Facebook video campaigns as low as 20 percent, going up to 30 percent,” which is “way below the average viewability rate for video ads on sites, which is approximately 50 percent, according to Integral Ad Science.” An anonymous media agency executive said about figures, “We will definitely look at cost per viewable impression for branding campaigns and amend our planning appropriately.”
Facebook’s New Mission Is To “Build Community” And Bring World Together. MediaPost’s Digital News Daily (6/22, O'Malley) reported Facebook announced its new mission is to “give people the power to build community and bring the world closer together.” Facebook’s previous stated purpose has been to “make the world more open and connected.” CEO Mark Zuckerberg explained in a new blog post that the change “reflects that we can’t do this ourselves, but only by empowering people to build communities and bring people together.”
Consumers Dislike Online Ads, Find Email Less Intrusive, Survey Finds.
MediaPost’s Digital News Daily (6/22, Schultz) reported a survey of 2,500 people found “two-thirds see online advertising in the same light as fake news and other aggravating content.” According to Rakuten Marketing, consumers feel disenfranchised and over 80 percent say that advertising interrupts their online experience. However, “when asked to rate the most interruptive formats, the respondents put email near the bottom.” Email performs better than other formats because “it’s less intrusive and more predictable — not in your face. And since you’ve probably subscribed to it, it’s probably about something that interests you.” Rakuten added, “The ad formats that consumers label as most interruptive are those that pop-up and cover content, pre-roll video ads, and ads that are delivered through push notification.”
Facebook Increasing Transparency Of Marketers’ Ad Placement.
MediaPost’s Digital News Daily (6/14, O'Malley) reported Facebook is “allowing a select group of advertisers to see a list of potential publisher destinations” as part of the social media giant’s effort to be more transparent. Facebook plans to later expand that feature to all of its Audience Network partners by the end of the year. The company “plans to let advertisers apply their block lists at the account level.” Facebook will soon allow “Audience Network partners to specify what types of placements – whether in-stream or native – they want their video campaigns to run in through an opt-out format.”
Small Business Survey Shows 45% Of Small Businesses Lack A Website.
CNBC (6/14, Rosenbaum) reported the latest CNBC/SurveyMonkey Small Business Survey found that most small businesses still rely on word-of-mouth advertising, and 45 percent said they do not have a website. Only 36 percent of the small businesses in the survey use a business website to communicate news to customers and potential customers. Antara Dutta, a digital marketing exporting and a mentor with Delaware SCORE, said, “People are just afraid of technology and don’t realize how simple or easy it cold be.” Dutta said that the advantages of having a business website and optimizing it for search engine results far outweigh the learning curve and the marginal costs of purchasing a domain.
Twitter Rolls Out Changes To Flagship App.
MediaPost’s Digital News Daily (6/15, O'Malley) reported Twitter “unveiled some changes to its flagship app.” It now includes a “new side navigation menu, and fewer tabs at the bottom of the app.” Grace Kim, vice president of user research and design at the company, said Twitter has “refined” and standardized its typography and added bolder headliners. The reason behind the change was to “make it easier to focus on what’s happening,” Kim said in a new blog post. “Rounded profile photos make it clearer to see what’s being said and who’s saying it,” she added.
NBC Analysis: Low Unemployment, Skills Gap Contribute To Labor Shortage. (06/27/2017)
In a “story of the giant ‘help wanted’ sign hanging over America,” NBC Nightly News (6/25, story 7, 2:25, Snow) cited a Bureau of Labor Statistics report that the US has a record six million jobs open, as employers are struggling to find qualified workers. NBC’s Stephanie Ruhle said that “the rate of increase in job openings [is] far outpacing the increase in actual hires. Many employers point to a skills gap in the labor force, a mismatch between the jobs they’re trying to fill and the workers needed to fill them.” However, others say employers are to blame, as wage growth has stagnated since 2009. Ruhle noted the executive order President Trump signed earlier this month to expand apprenticeship programs, but, she added, in some places “the help can’t come soon enough.”
Trump Signs Executive Order On Apprenticeships.
The Hill (6/15, Fabian) reported that President Trump signed an executive order “designed to expand apprenticeships to train people for millions of unfilled jobs,” and added that the order “directs the Labor Department to draft new rules allowing companies, industry groups and unions to create and certify their own programs, which would then be approved by the department.” MarketWatch (6/15, Schroeder) reported that the order “will double federal spending on apprenticeships to about $200 million annually.” The AP (6/15, Kellman) reported that “the money would come from existing job training programs.” The AP added, “Trump is directing the government to review and streamline some 43 workforce programs across 13 agencies.” USA Today (6/15, Swartz) reported that “a lack of skilled workers has created a hiring gap across several industries.”
Columns Tout Trump Apprenticeship Plan. In a column for The Hill (6/18), Urban Institute Fellow Robert Lerman wrote that “President Trump’s ringing call for expanding apprenticeship...should be welcome to all who favor a cost-effective approach to upgrading skills, raising job quality and widening routes to rewarding careers.” In a column for Fortune (6/18) Institute for Workplace Skills and Innovation CEO Nicholas Wyman wrote that President Trump’s new apprenticeships initiative “is cause for optimism that he will significantly improve the number and quality of apprenticeships in the economy.”
Labor Department Moves To Reverse Obama-Era “Persuader Rule.”
The Washington Post (6/9, Eilperin) reported the Labor Department announced that it would reverse the “persuader rule,” which would have required companies to “disclose their initial contacts with outside consultants on how to respond to unionizing efforts.” The Post said the reversal “marks a victory for business groups and a setback for organized labor and underscores the extent to which the department is starting to shift course under its new secretary, Alexander Acosta.” The Post added, “The regulation, which was finalized in March 2016, would require companies to report any ‘actions, conduct or communications’ they’ve pursued to ‘affect an employee’s decisions regarding his or her representation or collective bargaining rights.’”
Labor Department Rescinds Obama-Era Rule On “Joint Employment.”
Reuters (6/7, Wiessner) reported that the Labor Department announced it was “rescinding the Obama administration’s standard for determining when companies are ‘joint employers’ of contract and franchise workers.” In a statement, the department “said it had withdrawn a 2016 interpretation of the federal Fair Labor Standards Act (FLSA) that expanded the circumstances under which a business could be held liable for wage-law violations by staffing agencies, contractors, and franchisees.” Business groups “praised” the decision.
The Los Angeles Times (6/7, Kitroeff) reported that the Labor Department “also rescinded guidance stating that companies often deprive workers of protections by classifying them as independent contractors when they are actually employees.”
Fed’s Beige Book: Economy Grew At “Modest To Moderate Pace” Through May.
Reuters (5/31) reported that “the U.S. economy expanded at a modest to moderate pace from early April through late May but showed little sign of breaking out of a recent trend of sluggish inflation, a survey conducted by the Federal Reserve showed.” Reuters quoted the Federal Reserve’s “Beige Book report of the economy” as saying, “on balance, pricing pressures were little changed from the prior report.”
Fox Business (5/31, Leubsdorf, Chaney) quoted the report saying, “a majority of districts reported that firms expressed positive near-term outlooks; however, optimism waned somewhat in a few districts.” Fox Business added that “looking forward, businesses remained upbeat.”
The AP (5/31, Crutsinger) reported that “even with the tightening labor markets and more companies offering higher wages, the Fed said that business contacts noted little change to the broader recent trend of modest to moderate wage growth.”
Study: Jobs Without Steady Pay Spark Middle-Class Anxiety.
The New York Times (5/31, Cohen, Subscription Publication) reports the recently released US Financial Diaries Project – “an in-depth study of 235 low- and moderate-income households” – found that shifting pay within the same job has caused the persistence of an above-average level of economic anxiety, even as the unemployment rate dips below average. Oscillating hour tallies and unpredictable schedules make income difficult to rely on and can complicate aspects of family life such as childcare. The Times says that since monthly expenses and income both “pendulum,” but “do not necessarily move in tandem,” even the middle class increasingly is unable to “comfortably ride out the inevitable financial bronco ride.” Despite claims to the contrary, the gig economy doesn’t cause “jolts in income,” but rather “smooths them out.”
Number Of Workers In Gig Economy Expected To Double By 2021. The New York Post (5/31) reported the number of workers in the gig economy is expected to double to 9.2 million by 2021. Intuit and Emergent Research reported that these on-demand jobs will make up 43 percent of the workforce by 2021, more than the current number of professionals in finance or construction. The gig economy includes those workers who drive for Uber or use their home to hosts guests through Airbnb.