“I Can’t Keep the Lights on With the Costs of These Rules!” Small Businesses in Arkansas, Tennessee, and Mississippi Ask Advocacy for Help with Federal Regulations
By Claudia Rodgers, Senior Counsel
During the week of June 3, 2019, the Office of Advocacy held three Regional Regulatory Reform Roundtables to hear federal regulatory concerns directly from small businesses in Jonesboro, Ark.; Memphis, Tenn.; and Jackson, Miss. These roundtables are part of Advocacy’s ongoing effort to aid in federal agency regulatory reform, which is a result of Executive Orders 13771 and 13777. Advocacy is hosting these listening sessions in order to ensure small businesses’ voices are being heard and considered as federal regulations are being revised, reformed, or eliminated.
Pharmacists Speak Out on Burdensome Regulations
In Jonesboro, small businesses told Advocacy that they are frustrated and in need of regulatory relief. In particular, small pharmacy owners spoke about the unfairness of the pharmacy Direct and Indirect Renumeration (DIR) fees, which they said has led to inconsistent pricing and many local pharmacists going out of business. ‘DIR fees’ is a term that covers the monies that a Medicare Part D plan/Pharmacy Benefits Manager (PBM) may collect to offset member costs. “The CMS regulation is very disheartening,” one pharmacy owner stated. “We understand the need for regulations, but putting a small business in a bind, that is already strapped, is unsustainable.” All pharmacists in attendance told Advocacy they were extremely disappointed that CMS did not finalize a draft regulation that would address the pharmacy DIR fee issue. They also stated their frustration that the U.S. Department of Health and Human Services did not consider the impact the Fraud and Abuse rule would have on small pharmacies. “This system has created a nightmare for small pharmacies, like mine,” stated a small pharmacy owner in Arkansas. “Our business is increasing, and yet, as a result of these rules, our net profit is down over 70 percent this year! They need to act now!”
Similar sentiments were expressed by small pharmacy owners in the Jackson area. “I’ve been in this business for 40 years, but we are in danger of losing our livelihood and our patients,” one pharmacist stated. “We have love, passion, and unmatched service to the community, and yet we are in danger of going out of business,” he declared. Just as in Arkansas, Advocacy also heard about the dire situation with the PBM rules in Tennessee and Mississippi. A small pharmacy owner in Jackson declared, “We have a fox guarding the henhouse and he’s getting really fat!” Another independent pharmacy owner spoke from the heart about the DIR fees and the effect they are having on his business. “It’s not the federal government’s job to make me a living, but it’s not their job to put me out of business, either! … When a small business looks at a Goliath, we don’t have enough rocks to slay the monster!”
Small Businesses Highlight Labor Concerns
A small business owner in the golf course industry in Memphis told Advocacy that the lack of labor is the biggest issue in his industry and in the region. He stated that small businesses need to be able to rely on labor and immigration programs or they aren’t useful. “We used to use the H2-B program with great success,” he continued. “Many golf courses used to have 50 percent of their labor from this program. However now they use zero because it can’t be relied on.” A small agricultural products manufacturer in Memphis had a different issue that is most troublesome for his business. He stated that the Chinese tariffs and the resulting transfer of these costs to his consumers is really hurting his bottom line. “We little guys have to raise rates which causes our customer base to dwindle, while the big guys take our customers and can afford to keep their prices lower,” he complained. “These tariffs drive our sales down and it’s a fast, downward spiral that makes the company fall apart!” One small manufacturer suggested the tariffs be placed on foreign manufacturers instead of the U.S. small businesses. “Perhaps a waiver could be given for U.S. companies or given to small businesses,” he suggested.
An owner of a small construction company in Arkansas also told Advocacy that his biggest problem is labor. “The cost of construction is skyrocketing because of the labor costs… We need common sense immigration reform that will help small businesses, not hurt them. Trying to keep everyone out of the country is limiting the labor and growth of small business.” He suggested the federal government create a worker visa program where immigrants are pre-vetted. “Make them prove they aren’t criminals and promise to pay taxes, etc… Then have them provide proof of this every three to six months,” he suggested. He felt strongly that the U.S. Departments of Labor and Education both issue regulations in a “chaotic nature” that hurts small business. “The haphazard and willy-nilly operations of these agencies lead to uncertainty and chaos,” he claimed.
In Memphis, the owner of a small human resources company was concerned with the Employment and Training Administration (ETA) at the U.S. Department of Labor. She felt strongly that the ETA should rethink the services they offer to small businesses. Specifically, ETA’s thresholds on the number of employees a small business must have in order to receive federal funds for training should be lower. “It shouldn’t be a matter of how many employees a small business has. These funds should be available to all small businesses,” she stated. In Jackson, an owner of two UPS store franchises was concerned with the amount of paperwork and the lengthy process it takes to work with SBA lenders. He suggested SBA create a streamlined route for small business borrowers when they are working with a nationally recognized franchise organization that is well-established and has a long-standing history in the industry. “This would make it easier for franchisees to grow faster and easier for these small businesses to get financing,” he said.
These issues and more were discussed at the roundtables held in this region. Advocacy will follow up on the many issues brought to light during these meetings and will continue to make sure the small business voice is heard in Washington, DC as federal agencies consider which of their regulations are ripe for reform.
Advocacy was in Arkansas, Tennessee, and Mississippi for Regional Regulatory Reform Roundtables June 4-6.
Can’t get to a roundtable near you? Fill out this form and tell us about your federal regulatory burdens. We will pass this information on to the appropriate agency and use it in the planning of upcoming Regional Regulatory Reform Roundtables.
For more information on Advocacy’s mission, our regulatory reform efforts or to find out where the next Regional Regulatory Reform Roundtables will be held, please visit: https://advocacy-prod.ussba.io/regulation/regulatory-reform/.
Claudia Rodgers is Advocacy’s Senior Counsel. She can be reached at Claudia.Rodgers@sba.gov.