Employers’ Health Care Costs Have Nearly Doubled
The U.S. Department of Health and Human Services today released a report about the rising cost of health care. Among its conclusions: “Employer-sponsored health insurance premiums have nearly doubled since 2000.”
That increase in health care costs grew three times as fast as wage growth and cost employers’ $12,680 for the average family plan — nearly the same as a minimum wage salary for one year, according to the HHS.
In a news conference today President Barack Obama addressed the issue, expressing support for reform that’s being considered in Congress. “We need to control the skyrocketing costs that are driving families, businesses and our government into greater and greater debt,” he said.
The HHS report stated that family deductibles increased 30 percent in two years for average preferred provider (PPO) plans; for families covered by “small firms” the increase was 64 percent, from $1,439 to $2,367.
“It doesn’t matter if you have insurance or not,” states HHS Secretary Kathleen Sebelius, “when Americans go to the hospital or the doctor’s office, they are paying more and getting less.”
New Web Tool Calculates Biz Success
Starting a business is not for the risk averse. But in an effort to help entrepreneurs assess just how much risk is associated with launching or running their business, StartupNation.com, a website that provides business advice and networking for entrepreneurs, recently introduced an Odds of Success Calculator.
The business valuation device calculates a business owner’s odds of success based on eight factors: amount of capital investment, difficulty in obtaining funds, quality of financial management, degree of business planning, annual industry growth rate, management experience, industry experience and timeframe.
After a short questionnaire, the online tool computes the probability of success by accessing a database that compares the company against hundreds of thousands of data points of other companies.
Calculating risk is imperative for starting any business. But just how accurate and trustworthy is even the cleverest business valuation tool?
The Wall Street Journal blog, Venture Capital Dispatch, tested the calculator using Twitter’s information. The Odds of Success Calculator gave Twitter a 46 percent odds of success over the next five years. The lack of confidence shown by the online tool for one of the most revolutionary startups underscores the improbability for any algorithm, much less one constructed of only eight variables, to provide accurate or even directional guidance. Think about it. If you were Evan Williams, the chief executive of Twitter, would you quit?
That said, the Odds of Success Calculator addresses critical components like debt and management experience for any novice entrepreneur to consider. The calculator was born in response to the growing interest of visitors who wanted to learn whether they were on the right track or not. And the tool’s entertainment appeal, with its quick, definitive results, is tough to pass on.
–Deborah Song
Are Gen Y Workers Good for Business?
In his new book The Future Arrived Yesterday: The Rise of the Protean Corporation and What It Means for You (Crown Business), business and technology journalist Michael S. Malone argues that a new generation of young Americans entering the workforce — Generation Y — isn’t the best choice if you want loyal, hard-working, long-hour employees on your team.
“Managing this generation may not only be a nightmare, it may actually be impossible,” Malone writes. “It is quite likely that some sizable percentage of these new workers (and, being the so- called “echo” of the Baby Boom, their numbers are huge) will never work in a steady job on the payroll of a single employer. And an equally large segment may never know a career different from that of a ‘permanent part-timer,’ contractor, or consultant.”
Malone cites a piece written by Jake Halpern in the Boston Globe Magazine in which that author says evidence might suggest “this generation, which is flooding into the workplace, will create chaotic, unpleasant, and utterly unproductive work environments that will drive many a good business directly into the ground …”
The caveat, though, in Malone’s mind, is that Gen Y’s fierce independence will accelerate the nation’s evolution form a corporate economy of worker bees to an entrepreneurial one of innovative thinkers and rapid change, one where a majority of the Gen Y workforce is self-employed or even part of an ever-widening proprietary class.
“This cohort, many with parents who have always worked at home, has little interest in
ever taking an office job, or working for a business that doesn’t change,” he writes. The Gen Y group will be fiercely start-up oriented, and “by 2013, perhaps two- thirds of all adult Americans will be classified as entrepreneurial.”
The introduction and first chapter of The Future Arrived Yesterday are excerpted here.
Economic Recovery in Sight, Economists Say
Good news from the 2009 Chapman University Economic Forecast: Expect the recovery to begin in the next few months.
During an event held this morning in Orange County, Calif., Chapman University president James Doti and Esmael Adibi, director of the A. Gary Anderson Center for Economic Research, presented an update of the 2009 Forecast to an audience of approximately 800 business and community leaders. They reaffirmed the predictions first given in December 2008, and pointed to signs that the economy is on its way up.
On the plus side, the banking sector is “almost out of the woods,” stocks have rebounded, consumer confidence is finally rising and housing remains affordable. And most likely, the recovery won’t be W-shaped, which would be the case if the stimulus was the only thing supporting a turnaround.
But, Doti cautioned, even if a recovery is imminent, it will be a “mild” one, due to flagging levels of consumer spending (caused in part by higher savings rates) and sorry unemployment numbers that won’t reverse until 2010.
Adibi focused on the impact of housing prices and jobs. Although he noted that consumers are
“very gloomy,” he said the brunt of the recessionary forces will
hit in the second quarter of 2009, and year-over-year change in
GDP would go from -4.1 percent at the end of 2008 to +2.8 percent by the end of 2009.
He boldly added details to the predictions, stating his belief that the recovery would begin in September 2009. “It’s actually going to
start on September 8, 2009,” he joked. “My birthday.”
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*According to BusinessWeek, the 2008 Chapman forecast was one of
just two the publication tracked that predicted the current recession. The updated forecast is available
in the university’s June 2009 Economic & Business Review.
Plastic Increasingly Inflexible for Entrepreneurs
This spring a bigger problem than the bank-loan freeze has emerged for entrepreneurs: Credit card companies are slashing their limits, and small business owners are suffering because a majority of them rely on plastic to bolster cash flow and sustain operations.
The pullbacks are especially tough because more and more entrepreneurs are depending on the cards as their main source of credit. According to the National Small Business Association (PDF) 59 percent of small business relied on plastic for daily operations, up from 44 percent last year.
Nearly 8 out of 10 small business owners surveyed by the association say that credit-card terms have worsened in the last five years. In the last year alone, 63 percent of proprietors reported that their interest rates had increased. About 62 percent of owners stated that the newer credit card terms are affecting their ability to grow business.
Meanwhile, The New York Times reports that there is a proposal on Capital Hill to expand a new congressional mandate limiting interest rate hikes for consumer credit cards to include small business plastic.
Vacation Time is Stressing Employees Out
With many companies operating under-staffed during the recession, employees are feeling uneasy about taking time off, according to a recent survey by staffing company Randstad. It’s not actually going on vacation that’s getting workers down–it’s returning to mountains of work.
The Work Watch survey revealed that 77 percent of respondents found the first day back in the office, after returning from a vacation, was the most difficult.
Since a large part of preparing for time off revolves around making
sure an employee’s roles and responsibilities are being managed, survey
participants reported the last day in the office before vacation to be
the next most difficult thing about taking time off.
Interestingly, Generation Y employees, more so than any other, seem to
find it hard to relinquish their responsibilities while they’re
away–35 percent of 18 to 34-year-old staffers reported “giving up control of
my projects/work/responsibilities” as the most difficult thing about
taking vacation time.
What can be done to alleviate some of the stress associated with the
first day back in the office after a vacation? “It’s really a matter
of organization and priority setting,” says Eric Buntin, managing
director at Randstad U.S. “Many of today’s employees may very well have
more on their plates than ever before, but the pressure to pick up
right where you left off before vacation is often self-imposed.”
Tips to Alleviate Vacation-Related Stress
- Get a Head Start. Go through your emails the day before you return
to the office. After deleting the junk mail, scan for emails from your
boss and clients, assigning priority for follow-up upon your return to
the office. This will create a more focused environment once you arrive
to work the next morning. - Request a Status Update. If you work on a team or have staff that
reports to you, ask someone to send you an email updating you on your
projects. By doing this before you get into the office, you’ll have a
head start on your first-day priorities. - Arrive Early. Arrive before normal office hours to ensure you get
some quiet time to prioritize your to-do list and review and return
voicemails. Once coworkers begin arriving, chances are you’ll engage in
conversation and be met with distractions. - Take Your Boss to Lunch. Taking your boss to lunch on your first
day back gives you time to catch up on projects and discuss important
matters one-on-one. - Gas Up. Be sure your car has a full tank of gas so you don’t have
the added stress of stopping at the gas station on your way into work.
Other interesting finding from the Work Watch survey:
- Fifty-three percent of those surveyed say they have made vacation
plans during work hours; this jumps to 61 percent for Generation Y
employees. - Women (59 percent) are more likely than men (49 percent) to make vacation plans at work.
- Fourteen percent of Generation Y employees said that finding out
their absence was not missed was a difficult part of taking time off
for vacation. - Seventy percent of employees stated they are out of “work mode” as soon as they leave the office for vacation.
- Twenty-two percent of Generation X employees say they are never fully in vacation mode.
Facebook’s New Username Feature Raises Trademark Issues
If you’ve logged into your Facebook account within the last 48 hours or so, chances are you’ve already seen and read the following message:
Starting on Friday, June 12th, at 9:01pm in your time zone, you’ll be able to choose a username for your Facebook account to easily direct friends, family, and coworkers to your profile. Check out the Facebook Blog for more information or send yourself an email with the details.
assigned digital number that previously designated a Facebook user’s
home page, their chosen name will become part of the URL, making it
easier for anyone to search not only on Facebook, but also through
Google and other search engines.
Facebook’s move raises some interesting trademark issues for brand
owners. Chief among them, according to Morrison & Foerster attorneys, is the prospect that cyber-squatters may be able to register
business names for their own use, particularly as profile names are
being handed out on first-come, first-served basis.
note that companies or groups with trademarked names can block
squatters and interlopers from using their brands by following online
registration protocols that Facebook has set up – though they caution, “It remains to be seen exactly how Facebook will evaluate the validity of particular requests for protection.”
while Facebook has a policy in place that user names cannot be
transferred or sold, as often happens with online domain names, “The system may still be abused by users who select names that potentially infringe on trademark rights.”
short, the two attorneys note that under Facebook’s new profile
options, what’s in a name may not be so simple as what’s in a number.
IRS Eyes Mobile Phones
If you assign mobile phones to employees, they might be liable for a quarter of the applicable taxes if new IRS rules under consideration go into effect.
The idea is to take some of the burden off business owners’ backs. Already, a notice issued this week allows employers to forgo “minute-by-minute” documentation of employees’ company phone use.
“Minute by minute documentation really doesn’t make any sense — we’ve
been hearing all about it, and we said yes it makes no sense,” a
senior IRS official told Telecommunications Online.
The employee tax-liability rule would assign 25 percent of an employee’s phone bill as a
“taxable benefit.” Of course, if employees are required by your
business to stay in touch via company Blackberrys and the like, having
to pay the tax wouldn’t seem like such a benefit at all.
Business Loans Still Sluggish
The House Committee on Small Business today held a hearing on the state of credit for the small business community. Chairwoman Nydia M. Velázquez, a congressional Democrat from New York, stated that despite stimulus funds and loosened rules for U.S. Small Business Administration-backed loans, credit for Main Street business is still moving slow.
“From the start-up in Silicon Valley to the mom and pop restaurant on Main Street, small businesses everywhere are struggling to find the capital they need to keep their doors open,” Velázquez states. “While the Recovery Act took important steps to help fix the credit markets, entrepreneurs still can’t find the loans they will need to get the economy moving forward again.”
Her office states that, despite more liberal guidelines for lending, loans backed under the SBA’s most popular program, called 7(a), are lagging $5 billion below last year’s levels. She states that the agency has been slow to implement new congressional mandates and that there will be likely be additional oversight by lawmakers.
“Eight years of inept management and underfunding have come home to roost at the SBA, preventing the agency from stepping up when we need it the most,” Velázquez said.
Healthcare Reform Could Provide Estimated $855 Billion in Small Business Savings
Comprehensive healthcare reform will save the small business sector $855 billion over the next 10 years, according to a report released this morning by the nonpartisan Small Business Majority. The study, titled The Economic Impact of Healthcare Reform on Small Business*, noted that a system of shared responsibility among the healthcare industry, businesses, government and individuals would be critical to successful reform.
The data revealed the following:
- On costs: Without reform, small businesses will pay nearly $2.4 trillion
dollars in employee healthcare costs; with change, costs could be reduced up to $855 billion (36 percent). - On jobs: In 2018, an estimated 178,000 small business jobs will be lost as a result
of unchecked healthcare costs. Depending on the level of support, 128,000
(78 percent) of those jobs could be preserved. - On wages: Small business employees will see $12 billion in total wages lost to growing healthcare costs in 2009; by 2018, that number could reach $172 billion. Reform can preserve $309 billion (63 percent) of these lost wages.
- On profits: Over the next decade, small businesses will lose $52.1
billion in profits due to high healthcare costs. A reformed system will reduce
those losses by $29.2 billion (more than 56 percent).
In a follow-up conversation with Small Business Majority CEO John
Arensmeyer, I asked him to explain what entrepreneurs
should take away from the report, and what they should do to ensure
reform happens.
“Not enacting healthcare reform is going to be an unmitigated disaster,” he responded, “but implementing a system based on the framework Congress is working on right now–even with the [controversial] mandates for employee coverage–will be a tremendous benefit to small business. Even the most conservative versions of reform will produce better results.”
Arensmeyer stressed that business owners should express their views about healthcare reform to their elected representatives. “There are a million moving parts to try to fix a seriously broken $2.4 trillion system. That doesn’t happen overnight, or easily, without discussion and some disagreement along the way,” he said.
He finished with the good news. “On the positive side of the ledger, everyone wants change and is approaching this with good will and the desire to do the
right thing.” He added that, so far, Congress is on schedule to draft the final legislation after the August recess. “I think there’s a very good chance we’re going to get legislation before the end of the year. There’s a momentum building.”
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*The report’s analysis was led by Jonathan Gruber, economics professor at the
Massachusetts Institute of Technology, who applied a healthcare
simulation model to compare three different reform scenarios–limited,
expanded and significant support for small business owners. Gruber’s team looked at reform packages with varying
amounts of tax credits for employers who offer insurance, and different
payment levels for those who don’t.
