What does 2014 have store for Delaware’s Small Businesses?

It’s often said that small business is the engine upon which the economy of the United States runs.
How do things look for small business in the First State this year?

Thanks to this outtake from a recent NCCCC blog post on the minimum wage increase, we have an idea.

1. Workers Compensation rates will increase in 2014. It is unclear by what amount these rates will increase in January. What is certain however, is that an increase is coming. The insurance commissioner has delayed her decision with regard to the Delaware Compensation Rating Bureau filing (recommending an average 40 percent increase) until January to allow for further independent actuarial review of the loss cost data.

2. The Affordable Care Act is introducing new and unforseen costs for small businesses. One particularly troubling consequence of the ACA, and its requirement that employers of greater with 50 or more employees provide health insurance is to all employees working 30 or more hours per week, is that many major employers in the hospitality, restaurant and retail sectors are cutting hours for employees and issuing personnel policies that state that, going forward, new hires in what have traditionally been minimum wage or near minimum wage jobs, will be scheduled for no more than 29 hours per week. A one dollar increase in the minimum wage already exacerbates a situation where employers have a substantial business incentive to avoid hiring full time workers.

3. The Unemployment Surcharge on employers over and above their normal UI tax was increased this past year and will increase again in 2014. Following a surge in unemployment in 2009 after the financial crisis, the State of Delaware had to borrow about $82 million from the federal government in order to shore up the state’s unemployment insurance fund. That money must be repaid to avoid higher surcharges in the future.

4. An increase in the minimum wage will increase the overall wage floor, causing inflation all along the wage scale and saddling hard-pressed employers with even more costs. It is important to also note that worker’s compensation and unemployment insurance tax are paid as a percentage of payroll – as is FICA. Government action to increase wages will increase these costs for employers as well.

Here’s hoping the Chamber or anyone for that matter can help the Delaware General Assembly and the Markell Administration help the little guys (small business that is).

Don’t wait for anyone to do the heaving lifting for you though- if your business is impacted by any of these conditions in 2014, make sure you tell your legislators how and what they can do to support you!

Find your Delaware legislator here.

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