Job creation has been stagnant nationwide for some time now and this may be particularly true when it comes to small businesses, but a bill that was recently introduced to the U.S. House of Representatives might help to encourage a new round of hiring, and could particularly help middle class families.
The Fairness and Transparency in Contracting Act of 2013, from U.S. Rep. Hank Johnson, a Georgia Republican, is designed to close a number of loopholes that allow publicly traded companies in the Fortune 1,000, some even owned by foreign entities, to receive federal contracts that are intended to go to small businesses, according to a report from the American Small Business League. If the bill is successful, it could serve to create a large amount of business for independently owned companies, which in turn should lead to more hiring, potentially creating millions of jobs nationwide.
The issue has been one which many small businesses have been dealing with for some time, and federal investigations into the ways in which major companies (such as Verizon, Coca-Cola, General Electric, Bank of America, Delta Air Lines, Best Buy, Disney and more from outside the U.S.) have been able to receive contracts intended for independently-owned businesses have been ongoing since 2002, the report said. Nonetheless, little headway has been made with this issue in the time since, despite the fact that the U.S. Small Business Administration's Office of the Inspector General called it one of the most important major challenges facing the entire federal government, back in 2005.
Data shows that more than 98 percent of all businesses across the country have fewer than 100 employees – accounting for roughly 28 million such enterprises – and that these companies do about 90 percent of the new job creation nationwide, the report said. It's believed that if the law were to be passed, as much as $100 billion worth of federal contracts would go from larger corporations to small businesses.
Why this could be important for small businesses
Obviously, with that much money being diverted from major corporations to smaller ones, independent business owners would be in line to receive significant funding, which in turn can help them achieve their goals of expanding the reach of their businesses. More money coming in through federal contracts likely also means more hiring will be necessary for companies to meet the demands of their new deals.
However, small business owners will also have to keep in mind that expanding operations in this way could make them responsible for new provisions of federal law, particularly where the Affordable Care Act is concerned, because it mandates that companies with more than 50 employees offer them some sort of health insurance coverage. Owners will certainly have to prepare for this eventuality if their new hiring efforts in the coming months and years, if it brings them from below that threshold to above it. As a result, they might face significantly higher insurance costs going forward.
Of course, many independently owned companies are already facing significant costs for small business insurance policies of all types, including those for general liability insurance. They will likely also face more workers' compensation insurance costs if they expand their hiring efforts significantly and take on a number of new employees, and these are all eventualities for which owners will have to carefully plan and prepare. Weighing the added costs with the added benefits will likely help owners come up with the best possible way forward for their companies.