On February 22, a review by Sara Sclaroff of Penelope Leach’s book, Child Care Today: Getting it Right for Everyone, appeared in the Outlook section of The Washington Post.  Sclaroff noted that balancing work and child care is something we haven’t quite figured out as a nation. Despite the new First Lady’s commendable first priority to be “Mom in Chief,” the options for many American women—still the primary child care providers—seem few: either stay at home full time if that is an economic possibility, or work away from home full time and struggle to make do with less than optimal child care choices. As a working mom, Sclaroff notes, “there are more days than I can count when I linger in my daughter’s classroom at dropoff, wishing I could stay for hours, or find myself sitting at my computer giggling to myself about her latest malapropism.”

In a country that doesn’t lack for inventive thinking, though, it seems that a certain cadre of women are adopting a third way to attend to both work and family life: self-employment. A new study by three women academics, Tami Gurley-Calvez, Katherine Harper, and Amelia Biehl, released February 26 by the Office of Advocacy, looks at how self-employed women spend their time.

Are women, like men, primarily motivated to become self-employed by earnings potential? It appears not. More women than men—and more women in self-employment than in wage-and-salary work—seem to use self-employment to balance work and family needs. “Consistent with family motivations for selecting self-employment, self-employed women spend less time than both men and women in wage-and-salary jobs on work-related activities, and more time on household activities and caring for children,” the study finds.

Part-time self-employment for women may be more of a make-do solution than a panacea for mothers who need to work. Certainly it is one way of responding to Penelope Leach’s strong recommendation that parents take time to stay home with infants and young children to establish the attachment that is so necessary to healthy development. But it may prove to be a difficult path for single breadwinners.

A number of findings in Advocacy’s study about women’s use of time could be helpful to policymakers, including data about their earnings and education, differences by industry and marital status, and how women balance self-employment work with other activities. For more, see Self-employed Women and Time Use.

—Kathryn Tobias

The numbers we’ve seen recently reveal a small-business-dominated construction sector flat on its back. New housing starts for fourth quarter 2008 were down to just 550,000 units (on an annual basis) in December, just one-quarter of the 2005 level . And in January, housing starts sank to the lowest level since these numbers began to be tracked in 1959.

The stimulus package debate has itself stimulated innovative ideas to restore economic growth. One such idea was recently introduced by Edward Mazria, architect and executive director of 2030, Inc.  His idea would stimulate the economy, provide affordable housing, advance energy independence, and create construction jobs. Mazria described it at a Feb. 18 panel at the National Building Museum in Washington, DC, called “For the Greener Good.” The plan would give those seeking to purchase a home or refinance their mortgage the choice of various lower levels of interest based on the level of reduced energy consumption they built into their home.

Mazria offered an example of how the plan would work:

“A homeowner with a current $272,300 mortgage with equity of $12,000, would have a mortgage balance of $260,300. At an interest rate of 6%, the current monthly mortgage payment would be $1,633. If this homeowner wants to qualify for the 2.5% interest rate, they will need to renovate their home to use 75% less energy than that required by code, immediately creating jobs and putting construction teams back to work. The cost of renovation would be approximately $51,250, which includes a solar system. The solar system would qualify for a $7000 tax credit. The cost of the renovation, minus the tax credit, would be added to the mortgage balance, so that the new mortgage is now $304,550. However, because of the significantly lower interest rate, i.e., 2.5%, the new mortgage payment is just $1203, a savings of $430 per month. With the additional monthly savings on energy bills of approximately $145, this homeowner would save a total of $575 per month.”

Where can I sign up?

Mazria believes that the federal cost of the plan over a two-year period would be repaid  through the increase in the tax base resulting from 9 million jobs being created as a result of the new construction and renovation, as well as from the increased economic activity. Mazria calls his plan “The Two-Year, Nine-Million-Jobs Investment” or “The 2030 Challenge Stimulus Plan.” You can read more about it on his website.

—Kathryn Tobias

            February 12-14, the National Small Business Association (NSBA) held its Small Business Congress (SBC) in Fort Lauderdale, Florida.  Participants at the event included current and past Advocacy leaders, including former Chief Counsels Jere Glover and Tom Sullivan and Acting Chief Counsel Shawne McGibbon.

            Advocacy Chief Economist Dr. Chad Moutray led a Small Business Economic Forum and released the 2008 edition of the Office of Advocacy’s Small Business Economy report.  Chad’s presentation focused on general and small business economic trends, which made for a rather gloomy discussion.  The U.S. economy is in a recession; real GDP and consumption have recently fallen by over three percent, and the unemployment rate continues to increase.  Particularly hard hit is small business lending, which has slowed down dramatically.  Despite this uphill battle, Chad reminded attendees that small businesses are often the first ones to recover from a recession.  Difficult economic times are also often an impetus for increased entrepreneurship. 

            Acting Chief Counsel for Advocacy Shawne C. McGibbon, Assistant Chief Counsel Major Clark, and former Chief Counsel Tom Sullivan participated in a panel on Environment & Regulatory Affairs.  Shawne shared with attendees Advocacy’s recently published annual report on federal agency compliance with the Regulatory Flexibility Act (RFA).  Advocacy’s efforts resulted in a whopping $10.7 billion in federal regulatory cost savings for fiscal year 2008.  Looking forward, she also discussed what she considers to be the four biggest regulatory issues for small business right now: No-Match (DHS), CPSIA/toxic toys (Consumer Product Safety Commission), greenhouse gasses (EPA), and H2-A and H2-B visas (DHS).  More information on these issues and our efforts are available on our website.   

            Major focused on the small business contracting opportunities in the economic stimulus bill.  Attendees raised concerns about the ability of small businesses to finance contracts that may become available under the Recovery Act.  Major shared information on several tools in the Federal Acquisition regulations on contract financing and the SBA Certificate of Competency program, which he said should be carefully considered as potential tools for small businesses to overcome some financing hurdles.  On February 19, the Office of Management and Budget released initial guidance to agencies for administrating stimulus funds.  Section 6 of this memo recognizes the problems of businesses financing contracts and it encourages agencies to use alternatives to contract financing.

            Have any of these rules had either a positive or negative impact on your business?  If so, please let us know by posting a comment, sending us an email, or calling our office at (202) 205-6533.   

            The Connecticut House Commerce Committee met this week to hear testimony on HB 5930 An Act Requiring Small Business Analysis for Proposed Regulation.  Representative Diana Urban, a strong voice for small business in the state as well as trade groups and individuals, voiced her support.

            The proposed legislation would require that a state agency, prior to adopting a new regulation, complete an economic impact analysis.  Several of those who testified noted that this legislation would afford small businesses the opportunity to “weigh-in” on proposed regulations.  Lisa Hunter, Executive Director for the Independent Electrical Contractors, noted that “too often, we are unaware of how regulation will impact us until we are facing deadlines and have to scramble to comply or face penalties.  House Bill 5930 will help address these concerns and improve our business climate.”

            Using a recent regulatory change from the agenda of the Connecticut Legislative Regulation Review Committee, Representative Urban provided a Small Business Impact Analysis Template.  The simple four-step process she presented demonstrated how an agency can determine an economic impact estimate of a proposed regulation in simple understandable terms.  Her proposal lets those of us without an accounting degree understand what the cost is going to be in plain terms.

– Chris Monica

            Today, President Obama will sign the American Recovery and Investment Act of 2009.  I thought that it might be helpful to state what is in this Act for small business.  Here is a run-down of some of the larger items:

·      $720 million to help support a number of programs at the U.S. Small Business Administration (primarily reducing fees on 7(a) guaranteed loan guarantees);

·      $400 million in support for economic development and entrepreneurship, particularly in distressed rural, urban, and low-income communities; and

·      tax incentives for small businesses, including a continuation of section 179 expensing up to $250,000 on new capital investments, loss carry back for up to five years, a delay in the three percent withholding tax for businesses having government contracts, and a reduced capital gains tax for small business investors holding stock for five years or more.

            Small firms can take advantage of other parts of the stimulus package, as well.  For instance, there are major investments in infrastructure, broadband, green technologies, home winterization incentives, etc., which can benefit large and small businesses alike.  Here are some dollar figures for these expenditures:

·      $27.5 billion for road construction projects;

·      $26 billion to local school districts to enable them to have “21st century classrooms”;

·      $7.2 billion for broadband access to underserved areas;

·      $15 billion for scientific research;

·      $19 billion for health information technology investments;

·      $30 billion for improving the nation’s electricity grid and other energy improvements; and

·      $5 billion to help weatherize homes for low-and moderate-income homeowners.

            Hopefully, small businesses will be able to capitalize on the contracting opportunities just mentioned.  In addition, to the extent that the economy starts to improve, small businesses, which account for half of our real GDP and tend to recover quicker from recessions than their larger counterparts, will see indirect benefits from passage of this bill, as well.  For more information, refer to the sources below.

Sources: Speaker of the House, House Committee on Appropriations, House Committee on Rules

– Chad Moutray, Chief Economist

            Advocacy has had many calls lately about how small businesses are weathering the current recession.  The hard answers about how they fared in this recession, compared with earlier ones, will have to wait for data that are not yet available.

            At the same time, much talk is in the air in Washington about how best to support small firms in doing what many of them do so well—innovate and create economic activity that can lead to job growth.  What is most likely to help firms succeed?

            Part of the answer might be in the latest edition of The Small Business Economy.  Paul Reynolds and Richard Curtin’s chapter, based on the Panel Study of Entrepreneurial Dynamics, takes an analytical look at business creation.  Several factors—such as age, gender, supportive context—contribute to the likelihood of a person trying to start a new venture.  Six years into the attempt, about a third of the would-be entrepreneurs have quit, another third are still trying, and a third have a going business.

            What leads to the successful startups? None of the demographic factors supportive of the startup attempt are particularly relevant.  What’s most important for success in starting up is knowing the industry and aggressively pursuing the opportunity.  It’s what entrepreneurs know and do, not who they are, that makes the difference.

            Knowing and doing—no rocket science there!  So are there infrastructure adjustments that can improve the environment for knowing and doing—and entrepreneurial success?  In The New Pioneers Thomas Petzinger suggested that “connection, connection, connection” has replaced “location, location, location” as the mantra of the marketplace.  More than the location of businesses, it’s “the free and wide-ranging collaboration between and among them” that accounts for America’s prosperity.

            In this age of instantaneous information (and a tech-savvy administration), how do connections / networks contribute to entrepreneurs’ knowledge and innovation?  How can the information highway and its social networking bridges help them be more competitive and successful in a 21^st century global economy?

– Kathryn Tobias    

The National Small Business Association (NSBA) is holding its annual Small Business Congress (SBC) February 12-14, in Fort Lauderdale, Florida.  On Thursday, February 12, Advocacy Chief Economist Dr. Chad Moutray will lead a Small Business Economic Forum and will release the 2008 edition of the Office of Advocacy’s Small Business Economy report.  This year’s report includes special chapters on small business financing, federal procurement, international trade, employee training and development, tax policy, and business creation.  The full report will be available on our website following the release.

On Friday morning, Acting Chief Counsel for Advocacy Shawne C. McGibbon and Assistant Chief Counsel Major Clark will participate in a panel on Environment & Regulatory Affairs.  Shawne will discuss what Advocacy considers to be the top regulatory issues facing small businesses, with particular emphasis on the top environmental regulatory concerns.  She will also discuss our recently published annual Report on the Regulatory Flexibility Act FY 2008 (click here to access a PDF version).  Major is Advocacy’s procurement expert and will discuss key small business procurement issues and concerns.

Stay tuned for more information following the event…

Yesterday Advocacy hosted a roundtable on important tax issues.  Officials from the Internal Revenue Service made presentations on several topics, followed by Q&A from small business representatives. The topics discussed included the last-in, first-out (LIFO) accounting method, the revised Form 990 (which tax-exempt organizations have to file), and the home office business deduction. A representative from the IRS’s Taxpayer Advocate’s Office noted that 8.4 million small businesses operate out of the home, but only 2.7 million actually filed for the home office deduction because of the complexity of the IRS rules. Advocacy and members of Congress are closely monitoring this issue, and the home office business deduction is one of the r3 Top 10 rules in need of review and reform.

– Dillon Taylor, Assistant Chief Counsel

            On Friday January 30, U.S. Citizenship and Immigration Services (USCIS) announced that it will delay the requirement for businesses to use a new Form I-9 until April 3, 2009.  Previous versions of Form I-9 will no longer be valid after this date, and employers using the old forms will be subject to applicable penalties and fines. The new Form I-9 is available from The U.S. Citizenship and Immigration Services website.

            Employers must complete a Form I-9 for all newly hired employees to verify their identity and authorization to work in the United States.  In December 2008, USCIS released an interim final rule amending the types of acceptable identity and employment authorization documents employees may present to their employers for completion of the Form I-9.  Under the interim rule, employers will no longer be able to accept expired documents to verify employment authorization on the Form I-9.  The Form I-9 was revised to reflect these changes.  

            The delay will provide the agency with the opportunity for further consideration of the interim final rule and also allows the public additional time to submit comments.  USCIS has reopened the public comment period for this interim final rule for 30 days, until March 4, 2009.  The interim final rule and an informational copy of the revised Form I-9 will continue to be available for public comment at www.regulations.gov.

– Janis Reyes, Assistant Chief Counsel