November 22, 2014

Why Many Small Business Owners Don’t Like the President

Why small business owners don't like the President

A Gallup Organization survey  indicates that only 37 percent of business owners approve of President Obama’s job performance – 8 percentage points lower than those of all employed Americans. The gap between business owners and the rest of American workers has remained statistically the same since 2009 (see Gallup poll chart above).

Why Is It That Small Business Owners Don’t Like the President?

Demographics

Demographics are partially responsible. Business owners are older, whiter and more male than the rest of the population, Small Business Administration data show. And older White men tend to think the President is under performing.

In a September 30-October 6 Gallup poll, one third of Whites were positive on the President’s job performance, as compared to 68 percent of non-Whites. Among people 18 to 29, 45 percent liked how the President was doing, as compared to only 40 percent of those 65 and over.

The President’s approval rating was 47 percent among women, but only 40 percent among men.

Ideology

Ideology also plays a role. Small business owners believe more strongly in the value of free enterprise, and think the government should have less involvement in the economy, than the rest of the electorate.

A 2012 Harris Interactive survey (PDF) of 1,322 small business leaders revealed that 84 percent concentrate on a candidate’s support for free enterprise. In January of this year, Gallup surveys of small business owners and American adults showed that significantly more small business owners than American adults said that taxes and government regulations were a problem.

A 2012 Manta poll showed that small business owners think that the Republicans are better for small business than the Democrats by nearly a two-to-one margin. Because small business owners tend to disagree with Mr. Obama’s ideology, they think he isn’t doing a very good job.

Harmful Policies

A third reason for small business owners’ disapproval of the President is that many of his policies hurt their businesses. Take the president’s healthcare law as an example.

A Gallup poll conducted this spring revealed that 48 percent of small-business owners think the law is going to adversely affect their businesses, while only 9% think it will help, and 39% think it will have no impact.

Lack of Foresight

Finally, some small business owners fault the President for failing to anticipate the negative consequences of his policies for small business. Consider, for example, the Consumer Financial Protection Bureau (CFPB), a new agency established by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The CFPB has barred lenders from making qualified mortgage loans to borrowers whose debt is more than 43 percent of their income, and requires borrowers to prove they can repay their mortgage loans.

For small business owners who borrow against the equity in their homes to finance their businesses, this rule makes accessing credit tougher. Moreover, the focus of lenders on wage-based forms of income documentation makes providing they have the income to repay their loans harder for small company owners.

Between demographics, ideology and the intended and unintended consequences of the President’s policies, it appears that small business owners don’t think much of the President’s job performance.

But since Mr. Obama isn’t running for office again, I doubt he is losing much sleep over his performance appraisal from small business owners.

 

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Scott Shane


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

10 Reactions

  1. Speaking of lack of foresight, Obama lost a lot of credibility when he said he didn’t know how bad the Healthcare.gov website was. I know the POTUS has a lot on his plate, but this has been his main legacy legislation for two terms. How do you not pay attention to the implementation and execution? That’s something small business owners do every day with a lot less money and resources.

  2. Scott,

    This is given, IMO. As a non-U.S. business owner, I see things from the sideline and try to understand why U.S. small businesses receive lack of favor… Small biz is powerful in the U.S. – quantitatively, small biz vs. big biz is 1500:1 – for every big biz, there are 1,500 small biz running, working hard to go against all odds.

  3. Mr. Shane’s reliance on SBA and Gallop demographic data is flawed. SBA and Gallop surveys treat “latinos” as “non-whites”, when in fact latinos are racially white. Such a tactic by the Gallop skews the data.

    The SBA/Gallop collect all sorts of small business demographic data including; location, industry, income level, education level of the business owner, age of the business owner, how long the business has been operating, the number of employees, etc. If one wants to present the real demographic data, then all of these elements must be considered.

    Mr. Shane’s presentation of the racial aspect of those polled in the Gallop survey is pathetic as this implies that the dislike of the president’s performance is racially motivated. When in fact, the president is generally a poor performer.

    Mr. Shane, who likes to deal in facts, should have taken into consideration the fact that the president is indeed “white” himself, regardless of his skin color. (the president’s mother was white)

    [Edited by Editor to remove a personal comment]

    • Hi JS, I thought it was a reasonably balanced piece. Yes, race was mentioned.

      But if you read the rest of the piece, it’s hardly flattering to the President. Take this sentence: “A third reason for small business owners’ disapproval of the President is that many of his policies hurt their businesses. Take the president’s healthcare law as an example.”

      And keep in mind, statistics are just statistics. People read a statistic and tend to think in terms of absolutes, but it’s never absolute. For instance, there are plenty of female small-business owners who don’t approve of the President’s job performance, either – even though statistics suggest more women approve of the President than men. That doesn’t mean ALL women approve. And some men approve of the President’s job performance — but certainly not all. It’s just statistical.

      – Anita

  4. I’m surprised that he has 37% favorability. I thought it would be even lower.

    • Hi Kip,

      In a way it doesn’t surprise me. The reason for that is all the favorable media coverage for 5 years that President Obama has had. I think it would have been much different if more of the media had done their jobs, and asked more hard questions like they are supposed to.

      When most of the media uniformly present a favorable picture, even in the face of negatives, it tends to sway people. The media are powerful, but haven’t used their power wisely.

      – Anita

  5. Hi Scott,

    I think you left out one thing in what you wrote.

    It’s the intangible element of thinking for themselves and decision-making. Small business owners are used to making decisions everyday, and reasoning out the issues — especially the business owners who have beat the odds and survived the failure statistics and managed to be around more than 10 years after they started. They are used to assessing employees for hire, and figuring out if someone really has the skills for the job. They are presented with someone selling them something every day of the week. They learn to figure out what’s best, and when to say no.

    When your standard of living, your family’s well-being, your employees’ well-being, your customers’ well being (and your customers may be your friends and neighbors in your community) and your company’s very survival are at stake, you tend to question more and look at things more closely.

    In other words, you think for yourself. That’s what business owners do – or they wouldn’t be in business.

    That essence of being a small business owner is going to make you question and think more about what a politician — any politician — says. Small business owners as a group are going to be harder to convince than many others, because they can’t afford to take such things lightly.

    – Anita

    • Anita, you’re on a roll. Adding to your comments, small business owners also understand that a 2,000 page government bill with 10,000 pages of regulations just won’t work. I assume that most of the people who crafted the legislation had good intentions, and I might be stretching that assumption, but they don’t understand free enterprise, or how it works. Your comments on why most small business people are skeptical of the President are “spot on”. One small biz owner told me he would like to spend more time serving his customers than dealing with our overbearing regulatory environment, and now the ACA in particular. The inmates are running the asylum.

  6. That’s a nice way to put it. But I don’t believe that demographics alone is the culprit as to why they don’t like the president. It may also be the policies. But I still think it is quite interesting to put it that way. I just don’t want to generalize.

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