President Barack Obama’s re-election has local business owners optimistic after battling years of recession.
Harrisonburg’s local companies are a vital part of the the city’s economy. Nearly 85 percent of Harrisonburg businesses have 10 employees or less, and 92 percent have 50 or fewer employees, according to Dun & Bradstreet, a business information company that has offices across the U.S. and a few globally.
John McDaniel, manager of Dave’s Taverna, said that since the recession started in 2008, he hasn’t lost a substantial amount of money, but his customers started coming in less frequently.
“People that came three or four times a month starting coming once a month,” McDaniel said. “Business hasn’t gone down, but it hasn’t gone up, either. People are going out less, so they spend more when they go out.”
McDaniel hopes business owners, regardless of their political party, will work together to improve the economy.
“I’m hoping people get back to work and have confidence in the economy and the banks start lending,” McDaniel said. “Since [Obama] got re-elected, I think it’s time for the politicians to start acting instead of sitting around and waiting for the next election.”
Ryan Sacco, owner of SOS Advertising in Harrisonburg, said although his business hasn’t decreased much due to the JMU population and other businesses, the recession forced him to make sacrifices to remain in business.
“I used to work 40 hours a week before the recession hit, and now I work 80-100 hours a week,” Sacco said. “I was paying myself twice as much. There’s been a great deal of sacrifices to keep everybody where they are at. I have to work some nights, and some nights I actually sleep here, because it’s that late.”
But he doesn’t think much will change as long as the policies remain the same. He said his business greatly benefits from Obama’s Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
The act centers on a two-year extension of two acts that President George W. Bush put into place: the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. These two acts are referred to as the “Bush tax cuts” and are set to expire at the end of this year unless extended by new legislation.
The 2001 bill gave tax breaks to small businesses, and the 2003 law lowered the rate on investment profits.
“The payroll tax cut has been extremely helpful,” Sacco said. “Even as the owner, I’m on payroll with my employees, and that’s extra money in every paycheck.”
The payroll tax cuts come from Obama’s Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, set to end on Dec. 31.
Sacco said many people share a common misconception about how much small businesses profit..
“Most small businesses fall in the middle or lower income tax bracket,” Sacco said. “The majority of small businesses in the Valley are not profiting more than $250,000 a year, and that doesn’t include taxes,” Sacco said.
McDaniel said banks giving out more loans is one of the more important factors to help small businesses.
“I think the hardest thing for small businesses is bank lending,” McDaniel said. “It’s really hard to get loans these days since the banking fiasco. Banks are tight with their money, so if you want to do repairs or expand, it’s hard to get that money right now.”
The 2008 recession affected millions of people. According to the 2010 Census, more than 200,000 small businesses between 2008 and 2012 failed nationally. The country had more than 5.14 million businesses with about 99 employees each in March 2008, but that number dropped to 4.92 million by March 2010, losing about 223,800 businesses and 3.1 million workers.
Although a few businesses in Harrisonburg feel comfortable with the economy, Congress is currently facing a bipartisan gridlock. This leaves economic policies that could affect small businesses unable to get passed.
Sacco is concerned about the elected officials’ capability to compromise and understand what’s happening.
“When you don’t understand what the consequences truly are, they could be worse than you imagine,” Sacco said. “That’s my concern, is if they really understand the consequences, because I don’t, and I don’t think the average person does, either.”
Contact Kelsey Beckett at firstname.lastname@example.org.