Small business owners are feeling the pinch when it comes to providing employer-based health insurance, according to a recent study by the National Small Business Association (NSBA), released Sept. 28, found that 92% of small businesses are planning for an increase in their premiums in 2010. Although the average expected increase is 13%, one-fifth anticipate premium increases of more than 20% next year.

“Today, despite the very contentious public debate over how to fix the U.S. healthcare system, 62% of small business owners believe passing some kind of healthcare reform in the next year is important,” said Keith Ashmus, NSBA chair and co-founding partner at Frantz Ward L.L.P. “The key is enacting reform that won’t make costs go up.”

According to respondents, aside from small business job creation, offering health insurance to employees has for many years served as a significant competitive disadvantage for small businesses in competing with larger companies. Nearly 80% of small business owners believe offering health insurance provides their company a competitive advantage in recruiting and retaining quality employees.

“The cost of health insurance has dire implications on small business job creation,” said Todd McCracken, president and CEO of NSBA. “Premium increases forced 31% of small businesses to hold off on hiring a new employee, and 19% to actually lay-off an employee,” he added.

The NSBA 2009 Small Business Healthcare Reform Survey was conducted electronically from Sept. 21-23 using a sampling of 370 NSBA members.

–Renita Burns

Survey Shows Blacks See Global Warming as Major Problem

A Joint Center for Political and Economic Studies survey found that a majority of blacks believe climate change is a growing problem that needs immediate action to remedy.

Fifty-eight percent of the 750 respondents identified global warming as a “major problem,” with many (59%) believing environmental conditions will be worse for future generations.

“While African Americans are underrepresented in the public debates on climate change and environmental issues generally, they are as aware of these issues as other groups in American society, and committed to action — both personal and governmental — to deal with the problems associated with climate change,” said Ralph B. Everett, President and CEO of the Joint Center, in a statement.

A vast majority believe climate change is already causing–or will soon cause– worsening public health (59%), economic instability (61%), increasing flooding, fires, and droughts (60%), and energy dependence (64%).

One of the key findings in the survey is that 26% of African Americans believe they can do “a lot” to reduce global warming, and an additional 44% believe they can take “at least some measures” to tackle the problem. Respondents also expressed support for the cap-and-trade legislation, which puts limits on carbon emissions and gives rewards for energy efficiency. Many said they would support strong provisions for green jobs, incentives to buy energy efficient cars, and improvements to home energy efficiency.

–Janell Hazelwood

High Court to Tackle Time Limitations on Employment Discrimination

The U.S. Supreme Court said Sept. 30 it will hear a case this fall to decide how long plaintiffs have to file a lawsuit based on an employer’s discriminatory action.

The case stems from a 2008 ruling in which the 7th Circuit Court of Appeals reversed a 2005 verdict that found the city of Chicago guilty of civil rights violations for using a firefighter hiring exam that illegally discriminated against the plaintiffs. Although white test takers were five times more likely to qualify for the job than black test takers, the appeals court ruled that the 6,000 black applicants did not file their complaints of racism within 300 days after test results were announced.

The NAACP Legal Defense and Education Fund (LDF), which represents the black firefighters, argues that complaints of bias were not warranted until the city applied the discriminatory test results to hiring practices.

“This case will determine whether job applicants that a court has determined are victims of discrimination will be denied an effective remedy,” said NAACP LDF president John Payton.

The case, Lewis v. Chicago, hinges upon the court’s interpretation of Title VII of the Civil Rights Act of 1964, which safeguards against discrimination in the workplace.

Amendments were made to Title VII in January when President Barack Obama signed into law the Lily Ledbetter Fair Pay Act of 2009. The amendment revised the law to reset the statute of limitations for filing a discrimination lawsuit upon each biased paycheck.

Title VII was also brought into question in 2008 when one Hispanic and several white firefighters sued New Haven, Connecticut for race discrimination over the suspension of an exam for promotions. The city declined their promotions because no black candidates were eligible for advancement after taking the exam.

Lewis v. Chicago will likely be closely watched because new Justice Sonia Sotomayor ruled against the firefighters when she was a judge in the U.S. Court of Appeals for the Second Circuit. That ruling was later overturned by the High Court.

The Justices have granted the review of 10 new cases for the 2009 fall term; including an appeal of a ruling about the right to bear arms.

– Marcia Wade Talbert

A recent National Small Business Association (NSBA) report shows a small business community struggling to stay afloat in a dismal economic climate. In the “2009 Mid-Year Economic Report,” released this week, 94% of small businesses said the national economy today is worse off than five years ago, and those who think the economy is doing much worse jumped to 75% in July 2009.

“Nearly half of small businesses, up from a third six months ago, are not confident about the future of their own business,” said Todd O. McCracken, NSBA president. “The ongoing erosion of confidence from traditionally up-beat entrepreneurs is a wakeup call to lawmakers that small business may not be able to tread water much longer.”

Included in the report are indications of the difficulty small businesses are facing in reference to three key factors — revenues, profits, and employee size – which all declined between December 2008 and July 2009. Revenues and profits took an even larger hit with 62% experiencing a decrease in revenues, and 66% reporting a decrease in profits. The number of small businesses hiring new employees in the past 12 months dropped from 18% in December to 9% in July.

Access to capital continues to be a key issue, with 80% of small business owners negatively impacted by the credit crunch — up from 67% one year ago. More than 60% reported worsening terms on their credit cards and 38% were subject to a decrease on their lines of credit or credit cards.

“We’re struggling. Despite several economic stimulus packages and lots of talk, only 3% of small businesses reported a positive impact of the stimulus bills on their business,” stated Keith Ashmus, NSBA chair and co-founding partner at Cleveland, Ohio-based Frantz Ward L.L.P. “America’s small businesses need and deserve better.”

The NSBA is a small business advocacy organization that reaches more than 150,000 small firms nationwide.

–Janell Hazelwood

Percentage of Blacks on Fortune 500 Boards Decreases

Despite the fact that more African Americans are seated on the board of directors at Fortune 500 companies, the percentage of blacks on boards has decreased since 2004, reports a new study.

The number of blacks on boards increased from 255 in 2004 to 278 in 2008, according to the Executive Leadership Council’s “Census of African Americans on Boards of Directors of Fortune 500 Companies.” Yet, 39% of Fortune 500 companies have no African American directors.

“Businesses understand the economic benefits of diversity. They talk about it, but not all of them have a plan for achieving it,” said Carl Brooks, president and CEO of The Executive Leadership Council, a networking and leadership development forum for C-suite level executives. “We expect this report to spur meaningful progress in this important area of management and governance.”

Since 2004, the total number of board seats declined by 16 to 5,556, but the number of African American board seats declined by 36. Additionally, the mix of Fortune 500 companies has changed with some companies moving off of the list and other, previously smaller organizations, moving onto it.

Of the 278 African American board directors, 67 of them serve on two corporate boards, and 28 serve on three or more. This means that some black board directors are doing double and triple duty on the same boards, while other companies aren’t tapping any blacks at all.

The results of the study also show that the higher a company ranks on the Fortune 500 list, the more likely it is to have African Americans on its board of directors.

The report is the third report of its kind commissioned by the ELC.

–Marcia A. Wade

Black Reproductive Health Declining

Reproductive health in the United States is declining as human exposure to dangerous chemicals rises, according to data compiled by the Center for American Progress (CAP), in July. The incidences of fertility problems, preterm births, and low birth rates are alarmingly high among African Americans, says Reece Rushing, the author of the report.

More than 18% of black babies were born preterm in 2004, surpassing the 12% national average. While a confluence of factors including a dearth of adequate healthcare coverage and poor nutrition are suspected to play a role in the higher than average rates among blacks, chemical exposure is also thought to be a factor.

“Very low birth weight” – under 3.4 pounds – neared 3.5% in 2004, up from just below 2.5% in the 1970s. The national average stood at 1.5% in 2004, half the rate of blacks.

As reproductive health has declined, chemical production has increased dramatically, the report says. The number of chemicals registered for commercial use now stands at 80,000 —a 30% increase since 1979.

“We have more fertility problems, there’s more birth defects we have more miscarriages, more preterm births, and we don’t know exactly why it’s happening,” says Rushing, director of regulatory and information policy at CAP. “We do know we’re being exposed to more chemicals than ever before, and we do know these chemicals are dangerous to reproductive health, and it seems to be these chemicals are taking a toll.”

Exposure to these chemicals is usually though contaminated food, household products and cosmetics. The data reveals that poor people and minorities are generally exposed to chemicals at higher levels than whites.

The prospects for reversing the downturn in reproductive health appear to be brightening, Rushing says.  Last year Congress passed legislation that requires pre-market testing of children’s products sold in the United States. Rushing said there will likely be a renewed push for the Kids Safe Chemical Act, which would help reduce human exposure to dangerous chemicals, which in turn promises to lift reproductive health.

The report is based on a compilation of medical and education studies from various organizations including the Center for Disease Control, U.S. Department of Education, and National Child Survey which look at rates from the 1970s to 2005.

– Renita Burns

Vice President Joe Biden and Secretary of Health and Human Services Kathleen Sebelius speak at a healthcare roundtable on Friday. (Source: David Lienemann)

As every small business owner worth their bottom line has long known, the ability to offer a comprehensive benefits package is key to both attracting and retaining the best employees. But in the past few years alone, the rising cost of health insurance has left many entrepreneurs contemplating cutting health benefits or at a minimum, cutting back on their contributions, and they are anxious for Congress and the White House to enact meaningful reform.

According to the National Small Business Association (NSBA), premiums have increased by 119% since 2001, outpacing the rate of inflation, which has increased by 29% during that period. A Kaiser Family Foundation study has found that between 2000 and 2007, the percentage of small businesses offering health insurance dropped from 68% to 59%.

For months, insurers, pharmaceutical companies, and hospitals have been working behind the scenes, making deals with the Obama administration to signal that they’ve accepted the inevitability of healthcare reform and are finally ready to get on board. Small business owners and their advocates finally had their say on the issue last week at White House and Capitol Hill roundtables, while lawmakers in both chambers of Congress engaged in deep debate over how best to solve the problem of providing coverage to all.

“Everyone in Washington is talking about healthcare and rightly so, “ said Vice President Joe Biden at the White House’s Middle Class Task Force roundtable on the rising costs of healthcare. “It’s perhaps the foremost economic—and moral issue—that this administration is determined to do. But not everyone is talking about you all and I’m here to tell you that small business employees and employers are not a small concern to us.”

Anthony Harris, president of American Capital Contractors, attended the White House roundtable and recounted an experience that encompasses every small business owner’s nightmare.  Currently, Harris pays 100% of the insurance premiums for 63 employees, an expense almost equal to his payroll. His insurer recently covered 80% of the expenses for one employee’s cancer surgery, but the remaining costs forced the woman to declare bankruptcy. Further, the company’s premium rate will soon increase based on this one employee’s illness.

“We haven’t always been able to afford insurance and I’m not sure how much longer we’ll be able to,” said Harris, who plans to require employees to contribute.

Although House Democratic leaders and the Obama administration are committed to offering a public option, entrepreneurs and advocates are divided. The NSBA, for example, says that a public insurance option could do more to undermine than enhance market reforms.

“If they reform the marketplace and hold insurers accountable, I don’t think you need a public plan to achieve what’s needed,” says NSBA President Dodd McCracken.

Charles Davis, president of Technology, Automation & Management Inc., disagrees. His company, which employs 35 people, pays 95% of single-coverage premiums, but just 60% for family coverage because it is so much more expensive.

“The public option will increase competition and make the for-profit insurance companies become more competitive in pricing,” said Davis.

Most small business stakeholders also support the concept of an insurance exchange, which would enable them to reap the benefits of large-group rates and a greater choice of plans currently offered only to large employers.

Anthony Evans, executive vice president of ANCON, which he co-owns with his wife, pays 80% of the premiums for the 80% his 25 employees who opted for coverage, some of whom work and live in six other states. Because those premiums increased by 20% in the last quarter, the company will soon pay just 50%. He believes an exchange would offer greater choice and help contain costs.

A plan last week to unveil a healthcare bill on the House floor was blocked by the Blue Dog Coalition of fiscally conservative Democrats, who are concerned about the lack of deficit neutrality and inadequate small business protections.

Although lawmakers are still scrambling to settle these and other differences with other caucuses, Democratic lawmakers hope the bill will be introduced Tuesday.

The Credit Cardholders’ Bill of Rights Act, passed in September by the House of Representatives, would restrict certain practices by credit card issuers. Among them, it would prohibit interest rate hikes on existing balances under certain conditions, restrict card issuers from applying credit card payments to debts with the lowest interest rates first, and require banks to mail bills 25 days before the due date.

“Credit cards are now the largest source of financing for small business owners,” says Kyle W. Kempf, senior director of government affairs for the National Small Business Association (NSBA), a Washington, D.C.-based advocate for small businesses. “With business lending drying up, small business owners are going to increasingly turn to their credit cards. It’s important that this vital capital avenue be regulated with some sensibility.”

The bill must still go before the Senate, but with a new Congress convening in January, it is unlikely to be passed before then unless it’s added to the proposed second stimulus bill, Kempf says. If that doesn’t happen, Congress will have to start all over again next year.

Of particular concern to the NSBA and other organizations is the card issuer practice of raising interest rates retroactively. According to the NSBA, 12 percent of small business owners carry a balance of $25,000 or more and 38 percent carry a balance of more than $10,000. One such business owner is 35-year-old Akili Cooper.

Cooper opened The Remedy for Living, a home furnishings boutique in Bowie, Maryland, with his wife Princess Mhoon-Cooper. The couple used credit cards to help launch the store in 2007 and have at times had an outstanding balance of $25,000. A rate increase would be devastating to the bottom line, says Cooper, since it would not only be more costly overall, but it would raise the minimum amount due at a time.

Under the legislation, card issuers would not be able to raise interest rates unless a promotional rate expires, an index that the rate is based on changes, or if a minimum payment on an existing balance is more than 30 days late. Card issuers would also have to provide written notice of a rate increase at least 45 days before the change goes into effect. Business owners who depend upon credit would be better able to control their finances without the fear of a sudden payment increase looming, Kempf says. “Having $25,000 [with an interest rate of] 10% go to $25,000 at 30% is significant. It makes it difficult to have a sound business plan.”

The bill’s passage could also help offset another recent practice by the credit card industry that has hurt small businesses. With the credit market tightening, some cardholders have begun reducing the credit limits of customers who they perceive to be at risk of default. “If your credit limit is $10,000 on a small business account and they cut your credit limit in half, what do you do?” says Bill Hardekopf, founder of LowCards.com, a Birmingham, Alabama-based company that tracks credit card rates and practices. “You might need that extra $5,000 that they cut to order inventory or pay your bills while you wait for your cash flow to come in. It can have a devastating effect.”

Kempf is confident that the legislation will pass, either this year or after being re-introduced next year, particularly in light of the current state of the economy. “Small businesses are the only part of the economy that is still actually creating jobs unlike everyone else who is shedding them,” he says. The House passed the bill 312-112.