Small Business CEOs Reveal Why They’re Not Hiring: Economic Contraction, Obama, And Healthcare
Mike “Mish” Shedlock
Aug. 24, 2010
In response to Small Businesses are Not Hiring – Should They? I received a couple emails worth sharing. The CEO of a healthcare consulting company writes ….
You ran a series of articles on small businesses, hiring and expansions. I thought I would add to it.
I run a small firm, with about 45 employees and 40 contractors. We have been growing pretty well, close to 80% topline numbers for the past 3 years. Our average salary is over $100,000. We have some innovative software we sell to the industry. We also offer operational improvement strategies and IT consulting.
We provide great healthcare insurance coverage to our employees. It is necessary in order to attract talent and I am in the talent business. Our healthcare costs went up 90% this year – and that is on a 6-figure number to begin with. We found only one insurer willing to provide us coverage, United Healthcare.
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Every other provider pulled out of our segment of the small business market. Cigna, our prior carrier, refused to renew at the last minute on a technicality despite being our carrier for the past 3 years.
Our management team’s focus for two weeks was seriously diverted as we dealt with the consequences of this. Had we lost coverage altogether, we would have been out of business as our employees would go elsewhere.
Our staff is young and healthy, by and large. Average age is early 30s, in the healthcare consulting, software and technology industry. Only in a severely government distorted marketplace can a firm with a young and healthy staff that has had coverage for years face insurers pulling out or demanding a 90% hike.
We had plans to add one person to our R&D staff, a low 6-figure salary. That was shelved because of healthcare costs. Our software development cycle is slowed as a result.
How has the healthcare bill helped the economy? In this case, not one bit. And everyone of my employees has been hurt, because we switched mid-year, those who were part way into their deductible have to start all over again. That is a few 1000s for a number of employees. Because of a bill that passed that cost us money, and most of our employees money. No one is happy with this.
I have additional areas I would like to invest in. Areas that involve productivity gains, not just taking share from someone else, and not just for us. Many of the things I would like to do would reduce costs for my customers and build efficiencies in the healthcare industry as well.
One of our software products reduces the cost of clinical trials, and has saved millions of dollars in better planning. Another model we have developed reduces the cost of carrying inventory for bio/agritech firms. I believe it is the best in the world, developed by a Ph.D. out of Carnegie Mellon. It saves millions a year for large companies (Monsanto, Bayer Crop Science, etc. type of companies).
Productivity is the wealth of a nation.
However, thanks to Obama administration policies, we are pissing our edge away on dumb stuff which makes us hesitate to invest more. Thanks a lot, Congress.
The state government, California, (surprise, surprise, surprise) has intimated our customers. Several large companies are withholding taxes from our payments in case we need to pay sales tax on our services. We don’t. It is our responsibility to pay sales taxes under our contract anyway.
What can I do? Sue my customer?
How in the heck in this environment can a business owner feel good, create jobs, and expand?