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BPAA Biweekly Federal Policy Updates - May 3, 2019

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BPAA is pleased to provide the following biweekly update on federal policy. Please contact Tom Schreibel at tbschreibel@michaelbeststrategies.com if you have any questions or updates on activity at the federal level.

Visit BPAA’s website at http://bpaa.com/bpaa/government-affairs/summary  to read previous federal and state policy updates.

Administration

  • Photos: Melania Trump Shares White House Bowling Alley Renovation: First Lady Melania Trump shared photos Wednesday of the recently renovated White House Bowling Alley, in which she hosted the children of members of her U.S. Secret Service detail on Tuesday. The bowling alley, first installed and used in 1973 during President Richard Nixon's administration, has been used by presidents and their friends and families since then and was last renovated in 1994 during former President Bill Clinton's term. That renovation was a major departure from the original design, and the First Lady led the effort to restore the original wooden lane, while also updating electrical wiring, mechanics and the interior design. The cost of the renovation was funded by the Bowling Proprietors' Association of America, according to the White House. Read more at NBC Washington.

Labor Update

  • Bloomberg Government reports - Trump’s Top Labor Official Opposes Minimum Wage Increase: Labor Secretary Alexander Acosta said May 1 that he doesn’t support a change to the federal $7.25 minimum wage, signaling that the Trump administration’s top labor official would advise the president not to sign any bill raising the nationwide pay floor. “We do not support a change in the federal minimum wage at this time,” Acosta said May 1. House Democrats are still trying to build enough support to move a bill that would raise the federal minimum from $7.25 to $15 an hour in a series of steps. A group of lawmakers in the party are instead pushing a bill that would stagger pay floor increases based on regional cost of living. Republican critics have slammed the $15 measure as a job killer, but some have left the door open to a smaller hike. Congress last raised the federal minimum wage in 2007, using a series of steps ending in 2009. Acosta’s comments were part of his testimony during an Education and Labor Committee hearing where lawmakers grilled him on the Labor Department’s 2020 budget, controversial regulatory proposals, and other policy efforts. While minimum wage discussions have been working their way through Congress, much of the hearing focused on the agency’s workforce development plans, an issue that has captured bipartisan attention as the nation faces a workforce skills gap.
  • Bloomberg Government reports - Americans Are Seeing Highest Minimum Wage in History: The federal minimum wage rose to $7.25 an hour 10 years ago. It hasn’t budged since. For Americans living in the 21 states where the federal minimum wage is binding, inflation means that the minimum wage has lost 16 percent of its purchasing power. But elsewhere, many workers and employers are experiencing a minimum wage well above 2009 levels. That’s because state capitols and, to an unprecedented degree, city halls have become far more active in setting their own minimum wages. Twenty-nine states and the District of Columbia have state-level minimum hourly wages higher than the federal one. In Washington State and Massachusetts, for example, it’s $12. But the true sea change is in the surge of city and county governments setting minimums. New York City has a $15 minimum wage, while in SeaTac, Wash., it’s $16.09. Averaging across all of these federal, state and local minimum wage laws, the effectiveminimum wage in the United States — the average minimum wage binding each hour of minimum wage work — will be $11.80 an hour in 2019. Adjusted for inflation, this is probably the highest minimum wage in American history.
    • Growth in the Effective Minimum Has Taken Off in Recent Years: The effective minimum wage has not only outpaced inflation in recent years, but it has also grown faster than typical wages. We can see this from the Kaitz index, which compares the minimum wage with median overall wages. To put the growth in perspective: It took the 19 years ending in 2013 for the Kaitz index to rise four percentage points. In the six years since 2013, it has risen 13 percentage points.
    • The Federal Minimum Affects Only a Small Share of Minimum Wage Workers: Minimum wage laws above the federal level used to be the exception. In 1998, there were about a million minimum-wage workers in states with a minimum higher than the federal level, and virtually none in localities with separate minimums. Two-thirds of minimum wage workers lived in areas where the federal minimum applied. But today 89 percent of the nation’s 6.8 million minimum-wage employees face a minimum that is higher than $7.25 an hour. Even five years ago, relatively few such workers lived in areas with separate local minimum wages. One consequence is increasing regional variation. American minimum wages now range from New York State’s effective $13.73, which is 62 percent of the state’s median overall wage, down to New Hampshire’s $7.25 federal peg, which is just 30 percent of the state median.

 

Tax Update

  • 'Congress' worst tax idea ever'? Hardly – an opinion piece from Ken Kies, managing director of the Federal Policy Group, LLC and former chief of staff of the Joint Committee on Taxation: There has been much heated debate and hyperbole about many aspects of the Tax Cuts and Jobs Act, especially regarding the 20-percent deduction for pass-through businesses. It has been called everything from an “opportunity for businesses to engage in tax planning” to “encourage[ing]…owners to find ways to game the system” to “perhaps the most notorious of the Trump tax changes.” It is in this context that I would like to address comments made in an op-ed penned by my friend Ed Kleinbard, a respected tax law professor at the USC Gould School of Law and fellow former chief of staff for the Joint Committee on Taxation. I should note first that Ed and I are actual friends, and not in the sense that some in Washington may call their worst enemies “my good friend.” Ed and I recently had dinner together, in fact, and I greatly respect him (even if I sometimes disagree with his conclusions).
    • Ed’s Op-Ed was entitled “Congress’ worst tax idea ever,” so right away I have to agree to disagree. More importantly, the op-ed makes a number of bold claims that have to be fleshed out, including: “The subsidy isn’t targeted to small business or yeomen farmers but rather simply excuses the affluent from taxes imposed on the rest of us.”
    • Clearly the provision provides significant tax benefits to owners of businesses who everyone will accept as being small — the Joint Committee on Taxation (JCT) estimates that 95 percent of taxpayers who will claim the deduction are “small,” and only 5 percent of those who will claim the deduction are “medium,” “large,” or “extra-large.” Kleinbard: “In the absence of any giveaway, the top marginal tax rate imposed on individual owner-entrepreneurs in pass-through companies therefore also would be 37 percent.”  I am starting to lose track of how often I need to explain this, but the current top marginal tax rate on income is not 37 percent. Ignoring state and local taxes on such income, which is another matter, that rate is 40.8 percent (just as it was 43.4 percent prior to the Tax Cuts and Jobs Act). Read this full op-ed at The Hill.

Small Business

  • Hiring Tips for Small Businesses with Seasonal Workers: More and more small business owners are having trouble finding qualified workers to fill job openings—in fact, according to NFIB’s April 2018 Jobs Report, this is the top issue facing small businesses. And as the summer hiring season draws near, employers may struggle to obtain all the seasonal help they need from a limited pool of candidates who wield more leverage in seeking competitive wages and flexible schedules. Here’s how to overcome this challenge.
    • Build a Large, Quality Pool of Potential Employees: “Having the most options when making a hiring decision allows both employers and future star workers to find the best fits for their needs,” says Karen Harned, Executive Dir. of the NFIB Small Business Legal Center. “It relieves the pressure of having to hire someone out of necessity, as compared to hiring someone that will help someone grow their business.”
    • To do this, Harned recommends:
      • Starting early—don’t wait until the season is upon you to start looking and advertising openings.
      • Using multiple tools to get out the message that you’re hiring, including placing a help wanted sign in your window, posting a job description on social media and your website, and sharing the openings with your personal contacts.
      • Being honest and encouraging the same from candidates. Don’t sugarcoat company standards, goals, and expectations in favor of highlighting only the best features of a job. This can lead to wasted time in interviews and high turnover if the job doesn’t end up meeting the new hire’s expectations.

Read more here at NFIB.

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