OPINION POLL: SMALL BUSINESSES SAY WEAK CUSTOMER DEMAND, NOT REGULATIONS, THEIR PROBLEM

National poll finds 78 percent of small businesses say regulations needed to protect small businesses from unfair competition, level playing field with big business; 86 percent see regulations as necessary part of a modern economy

Washington, DC – Small business owners say their main concern is weak customer demand, not regulations, according to independent opinion polling released today.  In fact, when asked what would do the most to create jobs, small business owners’ top response was eliminating incentives to move jobs overseas. Reducing regulation came in fifth place.

Small business owners see government standards as an important tool to level the playing field with big business. In addition to protecting small businesses the vast majority of owners view regulations as a necessary component of a modern economy.  Click here to read the report, based on a national survey of 500 small business owners, released today by the American Sustainable Business Council, Main Street Alliance and Small Business Majority.

“These survey results underscore what Main Street small business owners have been saying all along: we need more customers, more demand, not deregulation,” said Jim Houser, owner of Hawthorne Auto Clinic in Portland, Oregon, and a leader with the Main Street Alliance. “In fact, I’ve seen first-hand from over 35 years in the auto industry that smart standards help create jobs and promote innovation in the U.S. economy.”

“Despite the heated rhetoric, regulations simply aren’t small businesses’ top concern,” said John Arensmeyer, founder and CEO of Small Business Majority. “Small businesses can be the jobs engine we need to jumpstart the economy, but not if legislators are focusing on something that isn’t their top problem. Policymakers should listen to what real small businesses are saying and act accordingly.”

"With football at the top of everyone's mind, if we played the game with no rules the Super Bowl winner would come down to which team was bigger or willing to play dirtier," said Frank Knapp, Jr., Vice Chair of the American Sustainable Business Council and president and CEO of the South Carolina Small Business Chamber of Commerce.  "Well, regulations are the rules of the game we call private sector competition. An overwhelming percent of small business owners agree that without fair regulations creating a level playing field, small businesses won't be able to compete against big businesses. From our perspective, the effort to kill regulations is big businesses’ way of rigging the game in their favor."

Key findings from the survey include:

• Small business owners see their top problem as weak customer demand, not regulations: 34 percent cited weak customer demand as the most important problem for their business, while only 14 percent named government regulations.
• On the question of what would do the most to create jobs, cutting regulations came in low on the list: the top response was eliminating incentives to move jobs overseas at 24 percent; reducing regulation was fifth at 10 percent.
• Small business owners see an important role for standards and safeguards: 78 percent believe some standards are important to protect small businesses from unfair competition, and 76 percent believe regulations on the books should be enforced.
• Small business owners see regulations as necessary for a modern economy: 93 percent agree their business can live with some regulation if it is fair, manageable and reasonable.
• Small business owners express strong support for specific rules and standards: 78 percent support rules to prevent health insurance companies from increasing rates excessively, 84 percent support food safety standards, 80 percent support product safety standards and 80 percent support disclosure and regulation of toxic materials.
• Small business owners support clean energy policies: 79 percent support ensuring clean air and water, and 61 percent support moving the country towards energy efficiency and clean energy.
• Small businesses believe in streamlining government processes: 73 percent of respondents believe we should allow for one-stop electronic filing of government paperwork.

For more information on these poll findings, visit:            

http://www.asbcouncil.org/poll_regulations.html 

http://mainstreetalliance.org/5511/poll-regs-economy/

http://smallbusinessmajority.org/small-business-research/downloads/020112_Regulations_Poll_Report.pdf

Poll results reported in this statement represent findings from an Internet survey of 500 small business owners nationwide, commissioned by the American Sustainable Business Council, Main Street Alliance and Small Business Majority, and conducted by Lake Research Partners. The survey was conducted between December 8, 2011, and January 4, 2012. It has a margin of error of +/- 4.4%.

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The American Sustainable Business Council is a network of business organizations representing over 100,000 companies and 200,000 business leaders. ASBC advocates for public policies that meet the realities of the 21st century global economy including strategic investments in workforce and infrastructure; standards and safeguards that promote innovation, prevent abuse and protect critical resources; and a new sustainable economic model that fosters a growing, economically-secure middle class. http://www.asbcouncil.org/

The Main Street Alliance is a national network of state-based small business coalitions. MSA creates opportunities for small business owners to speak for themselves on issues that impact their businesses and local economies. http://www.mainstreetalliance.org/

Small Business Majority is a national nonpartisan small business advocacy organization, founded and run by small business owners, and focused on solving the biggest problems facing America’s 28 million small businesses. We conduct extensive opinion and economic research and work with small business owners, policy experts and elected officials nationwide to bring small business voices to the public policy table. http://www.smallbusinessmajority.org/

Gallup misleading Congress and public

Tomorrow the U.S. House Committee on Small Business holds a hearing featuring the results of a Gallup poll conducted in October last year.  The title of the hearing is The Path to Job Creation but the better title might be The Path to Deceiving Congress.   

The issue is the role government regulations play in small business job creation.  The GOP mantra this election season is that regulations are hindering job growth and must be eliminated or severely reduced.  Last year the House passed numerous bills to do just that.  Those bills are now in the Senate where the majority party has a different perspective on regulations and what really is holding back growth in small business—lack of cusumer demand.

The preponderance of polling results last year clearly indicate that the lack of customers is the main reason small businesses have not been able to more vigorously lead us out of the Great Recession as they have in other downturns.  But the anti-regulation crowd has been trying to use the recession both to eliminate regulations opposed by big business and as a partisan weapon in this year’s elections.

The hearing tomorrow looks like an effort to elevate the regulations issue for the media and public and force the Senate into taking action on the anti-regulation bills the House has sent it.

This is where the Gallup poll comes into play.  According to that poll, 22% of small business owners said that complying with government regulations was the most important problem facing small-business owners today.   Gallup’s analysis of this open-ended question (respondents were not given answers to choose from) showed that of all the responses, “regulations” was the number one answer.

I have a Master’s degree in Social Psychology.  But familiarity with opinion polling is not needed to bust Gallup on this poll result. 

First, using an open-ended question is troubling because the decision of how to categorize each response is subjective.  A response might contain mixed messages and thus must be interpreted giving the Gallup employee the final say on what the small business owner really meant in answering the question.  At this point the employee’s own biases (or the biases of the employer) come into play throwing the accuracy of the poll results into question.  It is interesting to note that this was the only open-ended question apparently used by Gallup in this poll.

Second, Gallup’s reporting of the answers to this question clearly shows an effort to obtain the results they wanted.  Here is how Gallup listed the results:

What do you think is the most important problem facing small-business
owners like you today? [OPEN-ENDED]

Complying with government regulations                           22%
Consumer confidence                                                      15%
Lack of consumer demand                                              12%
Lack of credit availability                                                 10%
Poor leadership/Government/President                             9%
Cash flow                                                                        7%
New healthcare policy                                                      5%
Competition from big business and overseas                     4%
Lack of jobs                                                                    4%

It is not hard to see that the responses of “consumer confidence” and “lack of jobs” are simply explanations for why there is a “lack of consumer demand”.   Combining those responses we find that 31% of small-business owners identified “lack of consumer demand” as their number one response far exceeding “complying with government regulations”.

We can even make the argument that “cash flow” is a problem because of “lack of consumer demand”.  That would show 38% of the responses being “lack of consumer demand”. 

Third, Gallup only gives us 88% of the responses to this question.  Were the remaining answers so nebulous or divergent that they weren’t of value?  Shouldn’t the number of these unreported responses alone have told Gallup that the open-ended question was a problem.

So now we know how Gallup was able to report the response to the question the way it did.  Now the question is why?

The answer is clear.  This was a Wells Fargo/Gallup poll.  Wells Fargo and the other big financial giants have been vigorous opponents of the regulations coming from the passage of Dodd/Frank that is designed to protect all of us, including small businesses, from another Great Recession.  Only the petroleum/coal industry has been trying harder to turn government regulations into the boogeyman responsible for all the country’s economic problems.

The PR tactic to bash regulations has been to convince Congress and the public that regulations are hurting small businesses.  But as previously noted much of the survey work last year on the issue didn’t come to that conclusion.  Tomorrow, results of another poll will be released by three national business organizations—American Sustainable Business Council, Main Street Alliance and Small Business Majority—again throwing water on the anti-regulation rhetoric.

It is obvious that Gallup was trying to deliver to its financing partner a response the anti-regulation folks could promote.  Hence the hearing tomorrow featuring Dr. Dennis Jacob, Chief Economist of Gallup, who will talk about the poll.

But to Gallup’s credit it did ask another question with structured responses that undermines the result produced for Wells Fargo. 

Thinking ahead to 2012, what would be a primary motivation or reason
for hiring and new employees?

When revenues or sales have increased                            27%
When the economy improves                                           20%
If you need to support growth or expansion plans             17%
If you need to replace an employee who left                     10%
Having tax credits for hiring unemployed workers             7%
Some other reason                                                           7%

That’s essentially 67% of small-business owners saying “increased consumer demand” will lead to job growth.  Maybe the “when regulations are reduced” answer is buried in the “some other reason” response.