Do you understand where this is going? Four

I ran into a friend in the gym the other day. he is the President of a tech company providing IT services to the government. What they do is highly skilled and highly sensitive.I asked him how his business was doing.

“Terrible” he said, “We are scrambling for every dollar of revenue.” This surprised me. After all, there is clearly a lot of Federal money gushing out of Washington D.C. I just assumed that government contractors were laughing at the recession.

“Contracts that come up for renewal keep disappearing.” He went on to explain that Federal agencies were under instructions to take as much work in-house as they could, hiring new employees to do the jobs that formerly went into the private sector. “It’s happening fast.” he said. “Every time one of our long term agreements expire, it just never goes out for bid again.”

I wanted to limit this series to four quick blogs, not change this space into a political platform. Both the anecdotes and my concerns are still focused on small businesses. I can’t nail down the impact, and I don’t know if anyone can. It is happening at all levels, and I get the feeling that it is happening much faster than most of us realize.

I know that the administration has stated that they favor union membership for American workers. That they believe the government needs to take on a more active role in our society and the economy.

The health care bill made the college loan program a 100% government run organization again. More civil servants.The financial industry claims that it will cost 30,000 private sector jobs. Presumably that means at least 30,000 new public sector jobs.

Collecting these anecdotes and others in one place:

  • The health reform bill will drive tens of millions of people quickly into government controlled care
  • Financial incentives the will cause employers to accelerate the shift from private insurance to public
  • New laws to “ferret out” independent contractors
  • Increased DOL enforcement of labor standards
  • Increased IRS audits of small businesses (announced last month)
  • Nationalization of the automobile industry
  • Capture of large portions of the financial industry (e.g. Sallie Mae)
  • Nationalization of the home mortgage market (Freddie Mac, Fannie Mae)
  • Rapid reduction of the private sector in government services

To repeat, this is a small business advice blog, not a political platform. I’ll leaving railing about creeping socialism to those who do it for a living. What I am pointing out is that the massive resources of the Federal government are being used to rapidly change the face of business. We can talk about a change in Congress, or a one-term president, but no administration in the last 100 years had successfully reduced the size of government.

These changes are done. The average government employee now earns more than the average private sector worker. Civil service is increasingly attractive to workers for its compensation, benefits and job security. As business owners, we have to understand that the game has changed, and it will continue to do so. We need to figure out how we are going to compete on a new playing field.

Perhaps we shouldn’t worry. As one Congressman said “Small  business owners will still figure out how to make money. It’s what they do.”

Categories: John's Opinions, Leadership, Strategy and Planning... Bookmark this post.

Leave a Reply

Your email address will not be published. Required fields are marked *