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Study finds health costs hurt LI job growth

"We will see no job growth as long as this kind of situation exists," said Nathalia Rogers, director of Dowling College's American Communities Institute. "Government should consider subsidizing health insurance." (Dec. 2, 2011) Credit: Ed Betz

Soaring premiums for employee health insurance are among the biggest challenges facing small businesses on Long Island, according to a Dowling College survey to be released Monday.

Nearly five in 10 entrepreneurs said the cost of providing medical coverage to workers was stymying growth and, in some cases, shuttering companies. Only two other problems -- economic uncertainty and less consumer spending -- were identified as more serious.

The poll of 159 small-business owners in Nassau and Suffolk counties is part of a report about how governments can bolster the economy by aiding companies that create most jobs. The report is funded by a $200,000 grant from the U.S. Small Business Administration and is being assembled by Dowling's American Communities Institute.

After several years of single-digit hikes in insurance premiums, health-care benefits rising in the double digits recently has emerged as a huge challenge for businesses with payrolls under 500 workers, Uncle Sam's definition of a small business.

"We will see no job growth as long as this kind of situation exists," said Nathalia Rogers, director of the 10-month-old institute. "Government should consider subsidizing health insurance."

She also said the high cost of employee benefits make it difficult for Mom & Pop businesses to compete for workers with large companies that don't have to pass along as much of the premium bills to employees.

More than a third of entrepreneurs surveyed by Dowling also said taxes, regulations, energy costs or the lack of loans and lines of credit were obstacles to growth. The poll results were supported by the comments of 167 business owners at 10 focus groups and at a conference attended by another 110 business owners.

Possible remedies to the problems identified are the subject of another conference this morning at Dowling's Oakdale campus.

"Small-business owners are confident in their abilities; they aren't looking for a handout," Rogers said. "But they are very frustrated that all levels of government don't seem to care about them sufficiently."

At the 7-Eleven store on Merrick Road in East Massapequa, co-owner Pat Orzano endorsed the poll results, saying consumer spending has plummeted as people see neighbors lose jobs and worry about their employment.

Orzano, a member of the National Federation of Independent Business, called on Washington to stimulate consumer spending by renewing President Barack Obama's payroll tax reduction for workers and adding a break for employers.

She also backed an idea from one of Dowling's focus groups that would permit small businesses to set aside profits in tax-deferred savings accounts. During recessions, the money could be used without being taxed.

"This could really make a difference because the banks aren't loaning money even if you do pay your bills," said Orzano, who owns the store with her husband, Richard. In business for 41 years, they employ about a dozen people.

She added, "Small businesses are really struggling."

Small business concerns

Dowling College asked 159 local entrepreneurs what are the "most significant challenges to growth." Here are the top responses:

79.9% Economic uncertainty

61.1% Decline in consumer spending

46.5% Cost of health insurance for workers

39% State taxes

37.1% Local taxes, 35.8%

35.8% Federal taxes and energy costs

35.2% Regulations

27.7% Lack of capital

25.8% Rent

20.1% Lack of qualified workers and worker salaries

Source: 2011 survey by Dowling College's American Communities Institute

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