3 Big State of The Union Takeaways for Businesses

3 Big State of The Union Takeaways for Businesses

Image courtesy of BigThink

In his State of the Union address last night, President Obama laid out an agenda remarkable among 2^nd term presidents for its breadth and ambition. Among the array of policies he talked about, three passages stuck out for their relevance to urban communities and the people and businesses that call them home.

1) Raising the Minimum Wage

?Tonight, let?s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour. This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead.?? ? Barack Obama

The room let out an audible gasp when President Obama announced the rebirth of this policy. During the heyday of Obama?s post-election euphoria in 2009, he had previously shown support for raising the federal minimum wage to a gaudy $9.50. The political realities of an entrenched congressional divide however have made even a call up to $9.00 an audacious bid. Conventional economic wisdom suggests that raising the minimum wage actually leads to less jobs as costs for businesses rise. But recent research has suggested that the increase in costs is offset by lower turnover costs and higher productivity from workers. While it?s not exactly breaking news that higher paid people perform better, disagreement on the economics and the worries of an economy still laboring under 7.8% unemployment make the policy?s fate an open question. If proponents are right, this could be a boon for inner city residents and additionally provide a lever for businesses to hire them. If they?re wrong, this could be a potentially large setback for small businesses with already tight payrolls.

2) Is the Climate Ripe for Climate Change Policy?

?We can choose to believe that Superstorm Sandy, the most severe drought in decades, and the worst wildfires some states have ever seen, were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science ? and act before it?s too late.? ? Barack Obama

What does global warming have to do with urban businesses? Like the argument over the minimum wage, proponents would argue that creating a cap-and-trade market for carbon could unleash huge innovation on the part of American companies to comply and exceed the policy requirements. And, unlike other sectors of the economy, we at ICIC have some reason to believe that inner cities may provide the kind of narrow space requirements and access to urban centers that these kinds of companies might require. Past Inner City 100 winners Watermark from Lowell, Massachusetts and Research in Motion from Portland, Oregon are cases in point of this thesis. If the climate is indeed ripe for climate change policy, let?s hope the critics are wrong about the effect it would have on jobs.

3) Taxes, Spending, and the Sequester

?I realize that tax reform and entitlement reform won?t be easy. The politics will be hard for both sides. None of us will get 100 percent of what we want. But the alternative will cost us jobs, hurt our economy, and visit hardship on millions of hardworking Americans.? ? Barack Obama

Like the bulk of the media, ICIC has written extensively here, here, and elsewhere on the deleterious effects of these issues hanging over a fragile economic recovery. For a nation that once set its sights on beating the Soviet Union to the moon, self-congratulation over deciding to honor the spending commitments we?ve already racked up may seem like small potatoes. But recent decisions by Congress to postpone a fight on the debt ceiling are promising augurs of a future in which we may yet again set our sights on the impossible. While cuts on the $1.2 trillion ?sequester? may yet derail recovery, it seems like the worst has past. Let?s hope that Congress continues its good behavior and takes the advice of one of our most revered presidents, Abraham Lincoln: ?Devotion to the Union rightfully inclined men to yield somewhat, in points where nothing could have so inclined them.?

The State of our Union

Resolving disagreements over the minimum wage, climate change, and taxes and spending are daunting challenges that could have large implications for businesses and urban communities alike. But, in some senses, the return of battles over policy, instead of potentially destructive fights over things like the debt ceiling, represent a return to political normalcy and an indication that the state of our union is cautiously optimistic.

BY Sathya Vijayakumar on February 13th, 2013

TAGS: small business | business | jobs | cities | urban revitalization | politics | policy | minimum wage | sotu

Source: http://www.icic.org//connection/blog-entry/blog-3-big-state-of-the-union-takeaways-for-businesses

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