State Government and Government & Economic Development and Government and Small Business

Small biz owners: Unemployment systems not working

August 28, 2013

Janet South took a deep breath before she spoke.

The owner of DECO Group, a commercial painting company in Indianapolis, said she didn’t want to sound heartless.

But she told members of the Indiana General Assembly’s Small Business Caucus that she and other business leaders have a problem: They can’t compete with public assistance programs.

The benefits “are so deep and so wide that, truthfully, people don’t need to work for what we can pay them,” South said. She said some workers would rather accept government assistance and stay home to be with their children than come to work, even to a job with benefits.

People around South nodded emphatically as she continued. “And the unemployment system, it’s broken,” she said. “The benefits have become an entitlement program.”

The lawmakers – four of them, from both parties and both legislative chambers – listened intently. Some took notes. They asked South and other business leaders to stay after the meeting and give them more information. They gathered business cards.

“Legislators too often get insulated in the Statehouse and going out and meeting small business owners on their own turf, on their own time I think opens up the dialogue and you learn so much more,” said Rep. Terri Austin, D-Austin, a co-chair of the Small Business Caucus.

The meeting was part of a series of town hall meetings the caucus is hosting across the state. This one took place at Quality Environmental Professionals Inc., a firm in Indianapolis that bids on state work.

The company’s owner, Deb Peters, told lawmakers that she struggles to hire qualified employees – geologists, engineers and other highly educated professionals – because so many of them leave Indiana. She said the “brain drain” is making it tougher for her company to succeed.

And she complained the state has moved away from contracting with smaller businesses for work. Instead, Peters said, small firms like hers must become subcontractors of larger companies – often from out of state – who get the bids for projects.

John Guynn, the sales manager at DKC Inc., a disposable health care products company, told the caucus a similar story. He said bidding preferences meant to help Indiana-based firms win contracts aren’t working.

Guynn said that in 2008, the Family and Social Services Administration went with a Michigan company to provide incontinence products to its clients. Now, he said, the agency has issued another request for bids. But he held up the stack of rules to show lawmakers and said, “You almost have to get an attorney to go through all this garbage.”

The proposal calls for quality vendors. But Guynn said “bidders know it’s all going to come down to pricing, and the big companies come in and low bid the small companies.’

About a dozen business owners spoke at the meeting about taxes, regulations and training programs. But one topic – the state’s unemployment insurance system – kept coming up.

Barbara Quandt, director of the National Federation of Independent Business in Indiana, said that’s been the case at all of the town hall meetings so far. It’s a reflection, she said, of a growing frustration among business owners that the unemployment system is difficult to deal with and tipped too far in favor of the workers.

“Each meeting has had unemployment issues,” whether they involve compliance problems or benefits levels or taxes, she said.

On Tuesday, business owners told stories about employees collecting benefits despite quitting after little time on the job. They said some Hoosiers apply for jobs only to fulfill a requirement of receiving benefits but then aren’t interested in coming in for interviews. And they said the Department of Workforce Development isn’t providing unemployed Hoosiers with the skills and training they need to be good workers.

Ray Cox, owner of the Elite Beverage liquor stores in Indianapolis, told lawmakers that it’s obvious the unemployment system is being abused.

“It was once a safety net,” Cox said. “Today it’s another form of entitlement and it’s at the employers’ expense.”

Sen. Jean Breaux, an Indianapolis Democrat who attended the town hall Tuesday, said she was surprised to hear about the unemployment problems. Lawmakers recently overhauled the insurance system to try to dig it out of debt. The changes included a cut in benefits, an increase in employer taxes, and new rules aimed at stopping fraud.

But Breaux said additional changes may be in order.

“That seems to be a real big burden on businesses,” Breaux said. “I thought we had figured out a balance to that but it seems like we may need to work on it some more.”

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