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NSBA 1 The Politics of Small Business

FOREWORD As the 2012 elections kick into high gear, America’s small businesses continue to be a focal point for stump speeches, however what really matters is what happens after the campaigning is over. While we have no realistic expectation that this bipartisan rally cry for small business will translate into an easing of the partisan politics that are gridlocking the federal government, we are hopeful that lawmakers will take this time to consider the important role small business plays not just in the U.S. economy but in our overall political system. NSBA surveyed a broad number of member and nonmember small businesses on a variety of topics related to politics and the U.S. political system. The survey evaluated small business opinions on topics ranging from Congress’ understanding of small business to which party best represents small-business issues. And while the respondent’s political persuasion played a key role in their opinions, all small-business owners surveyed agreed on one thing: economic and fiscal issues drive their voting decisions. A key take-away from this survey is the fact that small-business owners are very active in politics with 97 percent saying they vote in national contests and 94 percent voting in state contests. Comparatively, voter turnout among the U.S. voting-age population for the 2008 presidential race was 57 percent. Additionally, 69 percent report they have contributed to a candidate’s campaign and 76 percent have contacted their lawmakers on small business issues. While the survey does show significant differences of opinion between Republican and Democratic respondents, there is broad agreement that politics have become more partisan in the last 10 years. Small-business owners expressed significant discontent with their elected officials and the overall U.S. political machine. Fifty-eight percent of small businesses think they are not well represented by nationally elected officials and 62 percent believe the U.S. political system does not serve their business well. Furthermore, most respondents agree that Congress and the administration don’t really understand small business. NSBA’s 650-plus respondents do not appear to be overly partisan, regardless of their own party affiliation. While there were more survey respondents who identify Republican, 80 percent say they do not vote a straight party ticket: 60 percent of Republicans say they occasionally vote for a Democrat and 68 percent of Democrats say they occasionally vote for a Republican. Large majorities of both parties report occasionally voting independent. Despite the many challenges thrown their way in the last five years, the Great Recession and a sluggish economic recovery, small businesses are still here. In fact, there are 70 million small-business owners or employees in the U.S.—that’s one in three of the U.S. voting population. While the outcome of this survey shows a relatively strained relationship between lawmakers and small business, it is not too late. Lawmakers have a long, and growing, to-do list which includes many measures that could positively impact small business beyond a stump-speech here and there. Current and hopeful lawmakers have an opportunity to reach out to a massive voting block by underscoring their commitment to America’s small-business community. We hope you find the information in this survey useful. Sincerely,  

 

Todd McCracken Chris Holman NSBA President and CEO NSBA Chair Michigan Business Network NSBA 2 The Politics of Small Business

A LOOK AT THE

DEMOGRAPHICS How many full time employees do you have? 1-5 5 - 19

Which of the following best describes the industry or sector in which your business operates? 36% Professional Services Manufacturing

29% 25%

20 - 99 100 - 499 0 500 + 0%

5% 4%

Which of the following best describes the structure of your business? S-Corp Corporation LLC Sole Proprietorship Partnership Other

40% 29% 18% 10% 2% 2%

Less than $100 K $100 k to $250 k $250 k to $500 k $500 k to $1 million $1 to $5 million

$5 to $25 million $25 to $75 million 4% $75 million + 1%

11% 10% 12% 13% 31% 19%

19% 11%

Construction Retail High tech/Biotech Distribution Computers/IT Services Transportation

8% 6% 5% 5% 4% 3% 3% 3% 3% 3% 2% 2%

Health Care Real Estate Printing and Publishing Insurance Finance Fabricated Products Food Service Chemicals

What were your gross sales or revenues for your most recent fiscal year?

23%

1%

Worth Noting The businesses surveyed represent a slightly larger proportion of c-corps than what is found in the at-large small-business community where approximately 17 percent are c-corps. Additionally, employee size and revenues are slightly larger among the survey sample than what is generally found among the at-large small-business community. Finally, the survey respondents represent a slightly higher proportion of manufacturers and professional services.

NSBA 3 The Politics of Small Business

A LOOK AT

POLITICAL INVOLVEMENT Are you registered to vote?

99% reported being registered to vote.

Worth Noting Small-business owners have a remarkably high percentage of being registered to vote and are politically active on myriad issues—not just small-business specific issues. Comparatively, voter turnout among the U.S. voting-age population for the 2008 presidential race was 57 percent. Small businesses also are highly engaged with 69 percent reporting they have contributed to a candidate’s campaign and only 20 percent reporting they have never given money to any political campaign or organization.

How regularly would you say you vote in the following elections/ ballot initiatives? Never

97%

Occasionally

94%

1% 3%

1% 5%

National Contests

State Contests

Regularly

85%

1%

13%

Local & City Contests

NSBA 4 The Politics of Small Business

A LOOK AT

POLITICAL INVOLVEMENT Have you ever contributed money to… (Check all that apply) A candidate’s campaign A political party An issue-specific campaign A political action committee A 527 organization Never contributed money

69% 56% 42% 38% 6% 20%

Have you ever contributed money to… (Check all that apply) A candidate’s campaign

74% 70%

A political party

47%

An issue-specific campaign

45% 41% 31%

A political action committee A 527 organization

Never contributed money

66%

43%

9% 5% 20% 17%

Republicans Democrats

Worth Noting Democratic and Republican small-business owners make similar levels of contributions, however Republicans have a notably higher rate of making contributions to political parties and political action committees.

NSBA 5 The Politics of Small Business

A LOOK AT

POLITICAL INVOLVEMENT Worth Noting

Do your elected officials know who you are?

Beyond simply contributing money toward campaigns and political parties, small-business owners are very actively engaged with their elected officials. Three in four small-business owners report contacting their lawmakers on small business and other key issues, and 40 percent report that their lawmakers know who they are or have an ongoing relationship with their elected officials.

Have you ever contacted your elected officials on an issue NOT having to do with your small business?

24%

28% 40%

Yes No Not Sure

32%

Have you ever contacted your elected officials on a smallbusiness issue?

24% 76%

76% Yes No

Yes No

NSBA 6 The Politics of Small Business

A LOOK AT

POLITICAL DISCONTENT How well do you think your elected officials represent you? Nationally elected officials

38%

State elected officials

58%

34%

9%

14%

Moderately Well

33% 62%

51%

19% Not Well

4%

48%

30%

Local elected officials

Do you think the current U.S. political system serves your business...

Not Well Moderately Well Well

Well

In the last 10 years, do you think politics have become… Total

84%

85%

Republican

Democrats

89%

5% More Partisan

6%

11% 2%

Less Partisan

9%

9%

About The Same

NSBA 7 The Politics of Small Business

A LOOK AT

POLITICAL DISCONTENT Do you think the ability of the U.S. political system to deal effectively with its problems is…

Worth Noting There is growing discontent among smallbusiness owners with their elected officials and the overall U.S. political machine. Significant majorities of both Republicans and Democrats agree that politics have become more partisan in the last 10 years and that the ability of lawmakers to deal with problems in the U.S. political system is deteriorating.

Total

89% 87%

Do you support campaign reform strategies?

10% 13% 8%

Improving

12% 9% 10% Deteriorating

Staying The Same

Worth Noting Yes - Restrict campaign contributions Yes - Liberalize campaign contribution rules No reforms are necessary

70%

Democrat

83%

2% 2% 5% a

Republican

Interestingly, despite the majority of respondents noting that they have made political contributions, 70 percent support some kind of campaign finance reform, namely, restrictions on campaign contributions.

Other

NSBA 8 The Politics of Small Business

A LOOK AT

POLITICAL INVOLVEMENT Worth Noting Although there are clear differences among Democrats and Republicans in terms of their issues, their support of particular lawmakers and how they view both parties, there are several unifying facts about the small-business community. Among those: the majority of both Republicans and Democrats agree that Members of Congress and the administration don’t really understand small business.

Do you think Congress understands small-business issues? 88%

12%

14%

86% 89%

Total Republican

11%

Democrat

Yes

No

Do you think the administration understands small-business issues? 87%

96%

53%

47% 13%

Total Republican

4% Yes

Democrat

No

NSBA 9 The Politics of Small Business

SMALL BUSINESS OWNERS

On The Issues Worth Noting Most small-businesses owners, regardless of political affiliation, place a higher level of importance on economic and fiscal issues than they do on national security and social issues.

Please rank 1 through 3, with 3 being the most important, how the following issue areas determine how you vote.

2.88

2.83

Total

2.7

1.66

Economic & Fiscal Issues

1.77

Republican

1.95

1.65

1.39

Foreign Affairs/National Security

Democrats

1.53 Social Issues

Please check where your political affiliations lie in the following three categories.

52% 35% 36% 27% 14% 13%

33%

30% 13%

Strong Conservative

31%

21%

18% 6%

2% Overall

41%

Social Issues Moderate Conservative

9% 8%

9% 1%

1%

Fiscal Issues/Economy Foreign Affairs/National Security Independent

Moderate Liberal

NSBA 10

Strong Liberal The Politics of Small Business

SMALL BUSINESS OWNERS

On The Issues Worth Noting When it comes to key issues, Republican and Democratic smallbusiness owners agree that controlling health care costs and tax reform are important by weighing in with their Members of Congress. However, when asked to rate which party is better on a particular issue, political affiliation played a significant role.

If you have contacted your elected officials on a small-business issue, what were the issues? (Check all that apply)

Controlling Costs of Healthcare Tax Reform Regulatory Reform Deficit Reduction & Entitlement Reform A local issue Small-Business Contracting Tort Reform/Medical Malpractice Reform Immigration Reform Fair Labor/Union Issues SBIR Reauthorization Improving Access to Capital A casework issue involving my business Other White House Conference on Small Business Exporting/Free Trade Issues SBA Lending Programs SBA Office of Advocacy Energy Efficiency for Small Business

Total

Dems

Reps

48% 47% 34% 33%

41% 35% 23% 11%

49% 52% 38% 38%

33% 25% 22%

37% 37% 8%

33% 21% 27%

21% 19% 16% 15% 13%

10% 10% 23% 30% 13%

23% 20% 12% 10% 13%

12% 12%

18% 23%

11% 9%

11% 11% 11% 5%

13% 20% 14% 11%

11% 10% 8% 5%

NSBA 11

The Politics of Small Business

SMALL BUSINESS OWNERS

On The Issues Republican survey respondent answers to: “Which party do you think is more supportive of small business on the following issues?”

Controlling Costs of Healthcare Deficit Reduction & Entitlement Reform Energy Efficiency for Small Business Exporting/Free Trade Fair Labor/Union Issues Immigration Reform Improving Access to Capital Regulatory Reform SBA Lending Programs SBA Office of Advocacy SBIR Reauthorization Small-Business Contracting Tax Reform Tort Reform/Medical Malpractice Reform White House Conference on Small Business

Not Neither Dems Reps Sure 3% 23% 3% 72% 3%

20%

2%

75%

32% 23%

12%

33%

15% 8% 10% 17%

23% 11% 30% 26%

3% 8% 4% 4%

59% 72% 55% 53%

8% 32% 34% 44% 24%

22% 24% 18% 17% 24%

2% 7% 5% 5% 5%

69% 36% 44% 34% 47%

2% 14% 12% 21%

1% 2%

84% 66%

19% 16%

4%

62%

Democratic survey respondent answers to: “Which party do you think is more supportive of small business on the following issues?”

Controlling Costs of Healthcare Deficit Reduction & Entitlement Reform Energy Efficiency for Small Business Exporting/Free Trade Fair Labor/Union Issues Immigration Reform Improving Access to Capital Regulatory Reform SBA Lending Programs SBA Office of Advocacy SBIR Reauthorization Small-Business Contracting Tax Reform Tort Reform/Medical Malpractice Reform White House Conference on Small Business

Not Sure 4%

Neither Dems Reps 21%

68%

7%

11%

37%

40%

11%

17%

19%

63%

1%

22% 10% 12% 17%

27% 18% 36% 36%

43% 63% 45% 43%

8% 8% 6% 4%

13% 22% 32% 36% 20%

31% 23% 18% 25% 33%

40% 51% 47% 37% 45%

16% 4% 2% 2% 2%

6% 23%

33% 33%

52% 23%

9% 20%

26%

19%

50%

5%

NSBA 12

The Politics of Small Business

SMALL BUSINESS OWNERS

On The Issues Worth Noting In-line with NSBA’s member-approved priority list, tax reform comes in at the top, however among Democrats, it only ranks as the number three issue. One common thread among these issues that both Republicans and Democrats support is leveling the playing field for small business. Because there were more Republicans in the survey sample, the overall issue rankings tend to put higher priority on typicallyheld Republican priorities such as taxes and regulatory reform. However, a recent Gallup Poll showed that regulatory burden was the number one issue for small businesses.

What do you think the federal government should do to help your business? (Check all that apply) Reduce & reform taxes

37% 66%

Reduce & reform regulations

34% 65% 18%

Get out of the way

63% Level the playing field for small business

48% 53%

Improve lending

Other

Provide more assistance programs

27% 31% 6%

6%

75%

75%

76%

65%

48%

24% 11% 31% 11% Republicans

Democrats

Total

NSBA 13

The Politics of Small Business

SMALL BUSINESS AND

PARTY AFFILIATION In this survey of more than 650 small-business owners—both members and nonmembers of NSBA, we found a higher proportion of Republicans to Democrats. While this is somewhat in-line with past NSBA surveys, it does appear to be higher than a 2007 Fortune Small Business/Zogby poll which pointed to a smaller disparity among small-business owners. Unfortunately no follow-up has been provided to the FSB/Zogby poll and no other independent polls on this issue were found. When comparing among NSBA data-sets, we found a notable drop in Democrats. This is partially attributable to the fact that in past surveys the only answers offered for party affiliation were: Republican, Democratic and Independent. In this survey, we also offered Tea Party, Libertarian and Green Party.

What is your political party affiliation?

54%

54%

48% 33% 16%

19%

NSBA 2011 Republican

30% 20%

NSBA 2008 Democrat

37% 35% 26% 16%

NSBA 2007

ZOGBY/FSB 2007

It is worth noting that in the 2011 survey, NSBA offered other party choices.

Independent/Unaffiliated

Another likely cause of the drop in Democrats is likely due to economics: a) most small businesses place a very high priority on fiscal issues over national security and social issues, and b) there exists a general mistrust of the party in power whenever there are economic hardships. As seen in the 2008 NSBA Survey, there was a slight increase in those identifying as Democratic – given that this survey was conducted nearly six months into the recession and that Republicans were in power, that shift makes sense.

Worth Noting

Despite political party affiliation, small businesses are overwhelmingly independent, with the majority—80 percent— say they don’t vote a straight party ticket.

Do you vote a straight party ticket?

20%

80%

NSBA 14

Yes No

The Politics of Small Business

SMALL BUSINESS AND

PARTY AFFILIATION Among Republicans and Democrats, how regularly would you say you vote:

95%

73%

86%

70%

60%

68%

74%

72%

39% 27% 3% 2% 3% Regularly

5%

24% 4% 6%

0% Occasionally

Never

Republicans

Federal Agencies

2.98 2.62 2.84

1.73

The U. S. Senate

1.98 2.02

The U.S. House of Representatives Senate Majority Leader Harry Reid

1.38

President Barack Obama

1.34

3.03 2.95 3.32 3.72

Republican

28%

21%

4%

0% Occasionally Democrats

Independent

Never

Democrat

Other

Worth Noting Of particular note is the fact that there is a very high rate of “cross-over” voters. Sixty percent of Republicans occasionally vote Democratic and 68 percent of Democrats occasionally vote Republican. Large majorities of both parties report occasionally voting independent.

2.69

1.86

House Speaker John Boehner

Regularly

Republican

Rating Average: Please rank 1 to 5, with 5 being the best and 1 being the worst how well the following elected officials are supporting small-business

Your U.S. Senators & Congress Members

14%

24%

When asked to rate the performance of their elected officials, both Republicans and Democrats had somewhat higher marks for their own Senators and Representatives but expressed less-than stellar marks for the collective bodies.

Democrat

NSBA 15

The Politics of Small Business

METHODOLOGY The Politics of Small Business survey was conducted on-line the first three weeks of October 2011 among 670 small-business owners, both NSBA members and nonmembers representing every industry in every state in the nation. While the results in this survey can be extrapolated to the at-large small-business community, it is worth mentioning that NSBA members tend to be older, more well-established small businesses.

NSBA 16

The Politics of Small Business

NSBA 17

The Politics of Small Business