The current Congress may be the least productive in modern U.S. history, but that doesn't mean 2014 will be a total wash for those hoping for action on important business issues.
Not only is Congress getting flack for its recent lackluster legislative performance, but 2014 is also an election year. That means many members of Congress will be looking for votes--and possibly leaning toward a more populist agenda in the process. This can be good and bad for the business community, depending on what industry you're in.
Here, we talked to some policy analysts about potential policy changes that could affect entrepreneurs and business owners in 2014:
Minimum wage: Business owners should gird for a potential hike in the federal minimum wage this year. You may recall the 2013 fast food protests in which workers across the country walked off their jobs to support a $15 minimum wage. But there was also a quieter (and possibly more realistic) effort on Capitol Hill to boost the federal minimum wage. Though not to $15 an hour, the bill that was introduced in the House would incrementally boost the hourly minimum over a span of three years to $10.10 by 2016, up from the current $7.25.
Before you start thinking that there's no chance that this seemingly unmovable Congress will act, consider this: The minimum wage rose under both John F. Kennedy and Bill Clinton, whose administrations were similarly challenged by obstructionist legislatures.
What’s more, in an election year, voters could force even unwilling representatives' hands. "The majority of Republican voters support raising the minimum wage," says Ross Eisenbrey, vice president of the Economic Policy Institute, a Washington, D.C.-based nonpartisan think tank. "If it is good for their campaign, [representatives] might have to go along with an increase."
While paying employees higher wages can dig into a company's bottom line, recent studies show that a roughly $3 hike in hourly wages could actually boost business. As the theory goes: If workers have more, they'll spend more.
Immigration reform: At this point, immigration reform isn't so much a question of whether but when. And it’s increasingly looking likely for this year. As the Republican Party learned in the last election, Latinos make up a vast voting block in the U.S. and if legislators want to reel in more of their votes in the next go at the polls, they'd have to do more. Enter immigration reform.
A comprehensive take on immigration reform has remained elusive, despite proposed legislation in both chambers of Congress. But the needle should move in 2014. Last week, Speaker of the House John Boehner (R., Ohio) announced a key hire to advise him on immigration issues, which shows a potentially more sympathetic stance toward reform. Though, he is reportedly considering individual measures versus something more comprehensive.
One broad effort that could pass? The House Judiciary Committee this summer approved a bill giving foreign graduates of U.S. universities who earn advanced degrees in math and science eligibility to receive 55,000 green cards by eliminating alternative immigration channels such as the Diversity Visa program, which gives priority to underrepresented communities. The bill would also raise the annual cap on H1-B visas to 155,000 from the current 65,000.
If a comprehensive effort on immigration is in the cards, you can expect movement in the next four to six weeks--well before the election in November, according to Dean Baker, co-director at the nonpartisan Center for Economic and Policy Research in Washington, D.C. Failing that, Baker says: Congress is more likely to enact "half measures with Boehner."
Tax reform: The forecast for tax reform is for a lot of talk, and maybe even some action in 2014.
Most business owners would agree that the U.S. is in need of tax reform. Considered as "pass-through entities" for tax purposes, many small businesses whose owners must report business income on their individual returns, can get stuck paying upwards of 39.6 percent (the top marginal rate for individuals) on earnings, while larger companies pay much less or even nothing.
To address this imbalance, Republican lawmakers like Paul Ryan (R., Wis.) are expected to propose tax reform legislation in the first quarter of 2014. Though there's potential for bipartisan support in Congress and President Obama has also favored reform, the analysts we spoke to weren't optimistic. "Tax reform is very unlikely to happen," adds Eisenbrey of EPI.
On the State and Local Levels
Business owners might also see significant policy changes in their own backyards, as local politicians look to make good on campaign promises or prop up revenues and cut spending. This could mean expansion potential into new markets for some, while other owners may be forced to raise their overhead costs.
Paid-sick leave: More cities are expected to adopt paid-sick leave mandates. In New York City, which is often seen as a testing ground for laws across the U.S., new Mayor Bill de Blasio has called repeatedly for mandating paid-sick leave for New Yorkers working at small businesses. He reaffirmed this message in his inaugural address this month.
Legalizing/decriminalizing marijuana: A burgeoning class of marijuana entrepreneurs may see the market for their services expand. This week in New York, for instance, Governor Andrew Cuomo called for allowing the medicinal use of marijuana in his annual State of the State address. The move would make New York the 20th state (joined by Washington, D.C.) to decriminalize or legalize limited marijuana use.
Legalizing online gambling: More states could legalize online gambling. While Representative Peter King (R., N.Y.) introduced a bill in the House this past summer aimed at legalizing online gambling on the federal level, that measure is still in committee. New Jersey, Nevada and Delaware have already legalized internet gambling, while states including California, Illinois and Pennsylvania are considering a measure.
Morgan Stanley projects the social gambling business--which includes real and virtual currencies like Bitcoin--could grow to as much as $7 billion by 2020, up from $1.7 billion today. But the growing popularity could be double-edged, says Bill Dunkelberg, the chief economist for the National Federation of Independent Business, a business advocacy group in Washington, D.C. With more states legalizing gambling, he adds that making gambling pay could get dicey.
"Every dollar spent in a local casino is a dollar not spent in some other local firm," he says. "Only way to gain is to get people from outside the political jurisdiction to come in and spend money."
But as is true with any regulation, there will be winners and losers.