Tag: jobs

Tales from the Small Business Trenches, Part 8: Crunching the Numbers

As any business owner will tell you, jobs are not created because there is a tax credit available. Jobs are created because it’s not possible to get the job done without more hands on deck and there is income to meet payroll. It’s time to look at the numbers.

The state of Washington has already determined we must pay no less than $9.04 per hour in 2012, no matter how unskilled our new employee might be or how slow the work pace. We’re assuming a part time job at 20 hours per week, or a total minimum wage base pay of $180.80. That adds up to a base pay of $7,232.00 working part-time from March thru November.

But wait, there’s more . . . 

A friend who knows what she’s doing suggested I take a look at IRS Publication 15 (Circular E) Employer’s Tax Guide (link here http://www.irs.gov/pub/irs-pdf/p15.pdf). It is the basic resource for anyone running payroll, but I quickly concluded the “E” is not for “Easy.”  59 pages of text and tables were not exciting after dinner reading.

Fortunately my friend, Brittany Fleming of Travis Pattern & Foundry, is an experienced Payroll Manager. She was willing to help walk me through the steps to figure out the impact of payroll taxes, and created a handy Excel spreadsheet to allow me to plug in different hours and wage combinations and see the impact on the bottom line.




Anticipated Tax Amount

State Unemployment


Varies based upon employer experience; Average for 2011 is listed here for new employers, actual rate can vary… http://www.esd.wa.gov/newsandinformation/faq/tax-rate-update-6-10.php/


Federal Unemployment


This would be 6.2% except you get credit for what you pay in state taxes unless you are in a “Credit Reduction” state.  Washington is not one of those states.  Also Wage Base may change for 2012 due to pending legislation.


Social Security






L&I Workers Comp  $2.1768 Rate is per HOUR worked.  http://www.lni.wa.gov/claimsins/insurance/ratesrisk/check/rateshistory/ – you are also allowed to deduct a portion of the premium from employee’s paycheck (amount authorized is determined when they provide you with your rate notice)








At minimum wage, payroll taxes add almost 35% to the total cost of adding this employee. What surprised Brittany as she put the chart together was the high rates charged by Department of Labor & Industries for Workers Compensation for a livestock operation. L&I Workers Comp is essentially a publicly run billion dollar disability insurance plan for employees, and the rates for a hired hand working with unpredictable livestock are higher than the rates for factory workers handling molten metal. The state has a monopoly on this mandatory insurance, and it is consequently more expensive than in other states.

Back to the basic question – do we or don’t we create a job? Can we afford to give up $9.759.15 of our income to pay an employee? Will having a hired hand allow me time to bring in enough off-farm income to pay for on-farm help? Workers Comp doesn’t cover business owners – would I be better off buying a good disability policy for myself than trying to prevent injury by getting some help? How about putting the money into capital improvements to make it easier to do the work without outside help? Can we make do with contract day labor and stay under the threshold for regulatory attention?

I was mulling over these question while my husband attended tonight’s Lions Club meeting. He arrived home to tell me about the speaker, who was introduced as an expert in working with L&I in a consulting role to businesses, helping protect businesses from fines by improving their paperwork and protecting their employees by improving safety.

The speaker painted a bleak picture of the environment for an employer in Washington – over 54,000 regulations to follow, penalties going up dramatically on January 1st as the state seeks to bring in more money, and a bureaucracy tilted in favor of finding fault rather than protecting worker safety. We have a higher injury rate and a lower return to work rate than similar states. The same agency that is charged with protecting worker safety makes most if its money off managing worker injuries, creating a conflict of interest. Washington’s benefits system is famous for being so generous that we attract malingerers from other states hoping to work the system rather than find meaningful work, making screening of new hires critical.

It was enough to make us both think twice about whether it’s worth the hassle to create a job. When I started this series, we had every intention of hiring an employee in January. Now we’re not so sure.

What would you do in our place?


For previous stories in the series, search this site for “small business tales”.


[photo credit: Tom Carmony]


Tales from the Small Business Trenches, Part 7: It’s Not Easy Being Green

We’ve been hearing about green jobs for more than three years. Growing jobs by growing the green economy was a centerpiece of President Obama’s first jobs plan. But just what is a green job? And why am I having such a hard time creating one?

The Washington Employment Security Department (link here) defines the green economy as “rooted in the development and use of products and services that promote environmental protection, energy independence, and economic development.” It goes on to define green jobs as:

 “Green jobs are jobs in the primary industries of a green economy that promote environmental protection and energy independence.

Energy independence includes the development and use of energy efficiency and renewable energy products and services.

Environmental protection includes the prevention and reduction of environmental pollution, as well as efforts to mitigate environmental pollution.”

Looking at the terms – green, growing, rooted – it would seem obvious that farming, ranching and timber are green industries. This conclusion is borne out by Washington Employment Security Department statistics, where agricultural workers take two of the top five slots on the green occupations list. Here’s why:

  • Agricultural lands may be used to grow oil seeds for direct use in biofuel production. Appropriate management of crop and range land is not only key to a healthy environment but provides local sources of food at a lesser carbon footprint than food imports.
  • Healthy rangeland supports a variety of wildlife in harmony with domesticated grazing animals. Managed grazing reduces wildfire risks, mitigates air pollution and recycles carbon from decaying plant material back into the soil.
  • Timber is a renewable resource both for construction and energy production. Well managed forest lands are a vital part of municipal watersheds, providing a critical public service for urban areas.

Jobs managing our natural resources are undeniably the original green jobs.

On the public policy front, Washington jumped on board with President Obama’s 2009 green economy and called together a distinguished panel of experts who put together “Washington’s Green Economy – A Strategic Framework.” Community Trade & Economic Development (CTED) was the lead agency, and the resulting publication can be found on the on the Department of Ecology website (link here). On page 13, this Strategic Framework announces that “forestry and agriculture – as a whole – fall outside of this definition.” The Strategic Framework goes on to say:

“However, organic farming and sustainable forest management are clearly contributors to pollution prevention, and conservation practices and recycled biomass in forestry and agriculture are certainly within the green realm. We have chosen to capture those activities in the other green-economy industry groupings, such as renewable energy, water conservation, waste management, etc.”

According to State Economist Arun Raha in a 2009 lecture to a group of architects, agriculture  is the primary driver of the economy of the state of Washington. If you look at the list of stakeholders and experts on the Green-Economy Jobs Initiative Advisory Team (page 2), you will find there are none – absolutely zero –from agriculture and forestry sectors. The strategic plan to create green jobs and strengthen the green economy didn’t include anyone with experience in the original green jobs.  Agriculture and forestry have been reclassified  into other categories by experts who didn’t realize the extent of their ignorance.

Meanwhile, back at the ranch . . .  We still need to create one green job in order to be more effective in sustainable management of healthy range land. Nothing in the Strategic Framework is going to help. It’s not easy being green.


For previous stories in the series, see the links below:

Part 1:  http://www.nwdailymarker.com/2011/09/tales-from-the-small-business-trenches-in-the-beginning-the-owner-created-jobs/

Part 2:  http://www.nwdailymarker.com/2011/09/tales-from-the-small-business-trenches-part-2-there-is-a-purgatory-for-job-creators/

Part 3:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-3-working-conditions/

Part 4:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-4-into-the-mountains/

Part 5:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-5-with-a-little-help-from-my-friends/

Part 6:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-6-big-wheel-keeps-on-turning/

[photo credit: Frankly Richmond]

Tales from the Small Business Trenches, Part 6: Big Wheel Keeps on Turning

Even though this is a linear series, job creation is a non-linear activity. While reading all the helpful employer regulatory stuff (where is that sarcasm font, anyway?) over the last two weeks, I had to remind myself exactly why becoming an employer sounded like a good idea two months ago.

In our case, what first triggered the notion of creating a job for a hired hand was a certain clumsiness on my part. Last summer I was knocked down four times by determined goats, barely avoiding serious injury on a couple of occasions. Having an extra set of hands around would improve workplace safety on the ranch. Stubbornly working alone is a major contributor to injuries among farmers and ranchers.

Second is the upcoming challenge of developing new wintering facilities. In addition to backing me up on regular chores, we could use a hired hand this next year to carry out fence building and barn repair tasks while my husband is busy on targeted grazing projects. Investing money into an employee instead of a contractor could fulfill objectives for both safety and necessary capital improvements for herd expansion.

If we don’t increase revenue, then the cost of an employee comes directly out of our pockets and reduces our income.  That’s not my idea of growing the economy, and this new employee must be part of growing revenue. To that end, this past week was focused on a long term project to establish a new agricultural cooperative.

The purpose of the co-op is to provide USDA processing for direct access by producers to retail markets, and to supply consumer demand for local food in local markets. Any time the farmer or rancher can capture a higher percentage of the consumer dollar by cutting out processing and shipping costs, it increases the sustainability of the family farm and supports local food production. A producer owned co-op can provide the level of farm to plate traceability that consumers are demanding.

The spin-off benefit is more new jobs. Right there is the third reason for becoming an employer – to free up more of my time to work on projects like the new co-op, so we can afford to hire somebody to build fences and chase goats, so we can take advantage of the co-op services, so the co-op can keep employees working, so the co-op employees can spend money, so other local employers can afford to hire employees, so we have a thriving economy to welcome home our sons and daughters who have left the farm seeking employment.

Economic growth means each new job generates more new jobs. Even creating a job for a hired hand is a part of the growth spiral. And the big wheel keeps on turning . . .


For previous stories in the series, see the links below:

Part 1:  http://www.nwdailymarker.com/2011/09/tales-from-the-small-business-trenches-in-the-beginning-the-owner-created-jobs/

Part 2:  http://www.nwdailymarker.com/2011/09/tales-from-the-small-business-trenches-part-2-there-is-a-purgatory-for-job-creators/

Part 3:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-3-working-conditions/

Part 4:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-4-into-the-mountains/

Part 5:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-5-with-a-little-help-from-my-friends/


[photo credit: kandyjaxx]

Tales from the Small Business Trenches, Part 5: With a Little Help From My Friends

It’s been another one of those weeks where the job of job creation has to give way to actually doing my own job. My daughter suggested seeking out a bookkeeping and payroll company to take me through the process and handle the paperwork. She holds such a position for a large organization, and she does it so indispensably that she was still answering text messages while she was in labor – until her husband turned off her phone.  She worked for me part time when she was in college, and she knows I need help.

A neighbor has provided payroll service for small businesses in the past and still has a few clients. However, last time we chatted, she said it was getting to be such a headache she’s cutting back and focusing on running a new business – without employees. Anyway, paying a consultant to create and manage one job just doesn’t pencil out.

A Facebook friend also provided helpful advice. She is another one of those capable women who run offices. The list of federal withholding forms and new hire reporting requirements didn’t phase her a bit, and she confidently said she could help. I’d already made one mistake about being an employer – the purpose of the Department of Social and Health Services (DSHS) forms. I said last week in Tales:

“Apparently I may have to serve as a collection agent if I hire someone who is delinquent in child support payments.”

My young friend corrected me:

“It isn’t even delinquent. They can be perfectly current and you still would have to serve as collection agent. I currently process anywhere from 80-100 employees with child support just in WA state . . . you also could have to deal with OTHER state orders coming in.

You also would have to serve as collection agent for the courts if the person has court-ordered Writ of Garnishment. I also process many of these every week. Not nearly as many as child support, but plenty of them.

I hadn’t even thought of those items that you would have to do once someone is hired – mainly because it is second nature to me after almost 9 years of doing payroll/HR.

Don’t forget about the laws relating to preventing sexual harassment in the workplace; discrimination; small employers may not be subject to Equal Opportunity Employment (not sure on this one) but even if not, you still could run into issues if someone thinks you slighted them for the job because of their race/nationality/heritage.”

Clearly creating a job is a tough do-it-yourself project, and networking with family, friends and neighbors for advice will be critical. Meanwhile I have deadlines for paying clients.  Job creating will have to take a back seat until next week.


For previous stories in the series, see the links below:

Part 1:  http://www.nwdailymarker.com/2011/09/tales-from-the-small-business-trenches-in-the-beginning-the-owner-created-jobs/

Part 2:  http://www.nwdailymarker.com/2011/09/tales-from-the-small-business-trenches-part-2-there-is-a-purgatory-for-job-creators/

Part 3:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-3-working-conditions/

Part 4:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-4-into-the-mountains/


[photo credit: hojusaram]

Tales from the Small Business Trenches, Part 4: Into the Mountains

For three weeks I’ve been trudging through the foothills of job creation, getting acclimated to the terminology. Last week I settled into base camp and followed advice from the Governor’s Office of Regulatory Assistance (ORA), which recommended “looking at Section 2 of the Grow chapter at http://www.ora.wa.gov/business.asp.”  A sensible mountaineer is willing to study the guidebook before attempting to summit a new peak, and this is definitely beginning to feel like a Himalayan effort.

As discussed in last week’s installment, finding time to focus on a new task is difficult for any small business owner. Checking out the “helpful” links for new employers on the ORA website started late Wednesday night and stretched into Thursday morning. At 1:15 am I was ready to give up on creating a job, but like the climbers in John Krakauer’s “Into Thin Air,”  I am continuing out of sheer stubbornness.

Previously I clicked through the ORA’s Workforce Explorer links to develop a job description, but declined to pursue assistance in training or posting the job. I checked out the link referencing federal tax credits, and it involves a lot more paperwork. If I happen to hire someone from one of the favored groups (“veterans, food stamp and welfare recipients, recipients of Supplemental Security Income, ex-felons and certain youths”), maybe I’ll give it another look. A $2,400 tax credit will not drive any business to hire.

The next links sent me to download the federal Internal Revenue Service (IRS) Form W-4 Withholding, IRS Form I-9 Employment Eligibility Verification (due within 3 days of hire), and state Department of Social and Health Services (DSHS) New Hire Reporting Program information (filed on line within 20 days of hire). I’m going to need a timetable to keep this straight.

The second set of bullet points on the ORA website is preceded with the following cheerful statement “Employment is also an area of significant recordkeeping and tax responsibilities. It’s important that you understand the regulations and costs as you plan your business.” The first link is titled Employment Law Advisor, and the link was broken. Better check back this week.

The remaining links on the list directed me to:

  • WA Department of Labor & Industries: Downloaded 58 pages of checklists, forms, laws and regulations related to wage and hour laws, independent contractors definitions, and workers’ rights. Downloaded another 40 pages titled “Employers Guide to Industrial Insurance in Washington State.” Also bookmarked link to Washington Industrial Safety and Health Act (WISHA), too lengthy to download and will have to return to the web to read up on an employer’s responsibilities.
  • US Department of Labor:  Don’t know what this form is, the link was broken. Not helpful, must remember to check back.
  • WA Employment Security Department: First link focused on warning about classifying someone as an independent contractor. Second link to information on unemployment insurance led to a maze of websites, mostly focusing on how to claim benefits. Finally stumbled on the link to the employer’s side of the deal, and bookmarked for return at a later time.
  • US Internal Revenue Service: More warnings about independent contractors, and links to online Publication 15 Employers Tax Guide and Publication 15A Supplemental Employers Tax Guide. Also links to Forms 943, Instructions to Form 943 and yet another supplement related to tax credits.
  • WA Department of Social and Health Services: Downloaded 16 page document titled “Employer’s Guide to Child Support.” Apparently I may have to serve as a collection agent if I hire someone who is delinquent in child support payments.

Without  a high speed internet connection, any new employer would be in trouble. Although many of the websites have instructions on how to contact an agency, order publications or file offline, you still have to be online to find them. And why is the government so fixated on making sure workers aren’t independent contractors? My cynical suspicion is because it’s harder to control and collect taxes on independent contractors, and not out of concern for working conditions.

It looks like I’ll be in Base Camp 1 a little longer, reading up on all my new  responsibilities as I try to create a single job. My little molehill seeking to employ a part-time hired hand is turning into a major mountain.

For previous stories in the series, see the links below:

Week 1:  http://www.nwdailymarker.com/2011/09/tales-from-the-small-business-trenches-in-the-beginning-the-owner-created-jobs/

Week 2:  http://www.nwdailymarker.com/2011/09/tales-from-the-small-business-trenches-part-2-there-is-a-purgatory-for-job-creators/

Week 3:  http://www.nwdailymarker.com/2011/10/tales-from-the-small-business-trenches-part-3-working-conditions/


[photo credit: jjwright85]


Cantwell Acts to Derail Development in Alaska, Threatens Future Jobs

Last week, Washington State junior U.S. Senator Maria Cantwell joined in the Obama administration’s curious war on American jobs. The newest target in Cantwell’s sights is a large proposed project in a sparsely populated corner of Southwest Alaska called the Pebble Mine, an undertaking to unearth rare natural resources that could provide thousands of well-paid jobs and millions in tax revenue to an area that is currently impoverished.

Even before the project has applied for permits, while plans for the Pebble Mine are being worked on and costly studies conducted, Cantwell has already requested the Environmental Protection Administration invoke subsection 404(c) of the Clean Water Act. Subsection 404(c) denies the disposal of dredge spoils or fill onto any land potentially draining into the nearby Kvichak and Nushagak Rivers. Though Cantwell purports to have made the request to protect fisheries downstream in Bristol Bay, it seems obvious that her demand is a transparent attempt to halt an industry essential to modern life but now deemed too “dirty” for the sensibilities of today’s environmental activists.

Cantwell’s request amounts to one more example of a lawmaker using the Clean Water Act to impose economic paralysis on any development judged environmentally undesirable, a capricious use of federal power. Because the federal government’s authority has expanded to cover virtually every gallon of running or standing water in America, there is almost no development that cannot be aborted over hypothetical concerns about possible water pollution. The type of stalling action employed here by Cantwell also makes a mockery of the entire environmental review process because it seeks to halt the project before the developers can even present their case.

The real irony is that the Pebble Mine is being designed by its developers to be a showcase of environmentally responsible mining methods, plus the area has rich deposits of copper, gold and other minerals that would make the mine a job creator for decades. To this date, the Pebble Partnership have demonstrated their willingness to respond to the concerns of environmentalists. They acknowledge that it is to their obvious benefit to be the most careful stewards of the environment surrounding the mining operations.

The Pebble Partnership has already invested more than $120 million on environmental and socioeconomic studies associated with the Pebble Mine proposal, research that would be open to the scrutiny of the EPA, the Congress, environmental activists, and the public, if it were not for Cantwell’s move to preempt. They anticipate spending several times that amount by the time the 70 required state and federal permits have been obtained for the project.

This country needs to have a serious conversation over whether the excessive regulatory burdens imposed by the EPA are killing jobs and unduly harming industry. But if Senator Cantwell is successful, it would appear that the conversation is whether industry itself is still allowed in America.


[photo credit: JRockefellerIV]

Tales From the Small Business Trenches, Part 2: There is a Purgatory for Job Creators

Last week’s article ended with a question emailed to the Office of Regulatory Assistance. An efficient staff member replied the same day. I asked, “How do I know if our business is already licensed to be an employer and I need to re-file my Business License?” Her answer suggested that I read the ORA guidance on the subject. Of course, it was the ORA guidance that prompted me to ask the question. Sigh . . .

I called the woman at ORA and left a voice mail clarifying my question. She cheerfully called back within two hours and said that if our business was licensed to be an employer, then we would have been filing reports with the Department of Labor & Industries for the past year even though we have no employees. We haven’t been reporting to L&I, so that clears up the question. Re-file it is.

Back to the State of Washington Business Licensing Service web page and halfway through I hit the next roadblock – I can’t complete the Business License process unless we plan to hire within 90 days. Our timeline to hire is early next spring. New business license goes back on the To Do list and on to the first link on the ORA checklist – the Employment Security Department Workforce Explorer website, which offers a link to another website for writing a job description. Shouldn’t be too hard to write a description for a hired hand – someone willing to put his/her hand to any chore that comes up at the ranch. Do I really need another website?

An article in the Capital Press tells me maybe I do. A Yakima area rancher has been sued twice on behalf of three sheepherders who came from South America to work. The rancher won the first suit at the Washington Supreme Court, and now is facing another suit. Lawyers for the sheepherders claim they were asked to perform ranch hand duties outside their job description, like fixing fences, maintaining machinery and general ranch chores. Fixing fences, maintaining machinery and pitching in with chores comes with the territory when taking care of livestock. Writing a defendable job description looks like a necessity.

On to the ESD website. Unfortunately, the ESD job description builder breaks a job down into discrete parts and doesn’t lend itself to the non-specialized and unpredictable environment of family farming and ranching. An hour later, I had a properly filled out form that didn’t really describe what we’re looking for. Another link offered an option to search by job title. A search for “hired hand” turned up a formal description that wasn’t far off, and included a range of wage rates. Another link offered an opportunity to explore wages in more detail by region in the state, but I gave it up after about six clicks. Too Much Information.

I untangled myself from the web and took a deep breath. Creating a job is going to involve not only figuring out the applicable regulations but sorting through a lot of clutter. Clearly I can’t try and squeeze this into bits of time available in between other duties as a small business owner and community volunteer.  Next week I’ll set aside a half day and tackle the job of creating a job as a part-time job in its own right.


[photo credit: Daniel Davies]

GOP ‘Think-and-Do’ Tank Issues Low Scores For Obama on Jobs

GOPLabs, a team that is swiftly gaining a reputation as Republican Congresswoman Cathy McMorris Rodgers’ “think-and-do” tank in the Capitol, has generated an assessment of Pres. Barack Obama’s progress on job creation.

Though Obama continues to beg for extra chances as he leans into a heavy schedule of political campaigning in advance of next year’s election, the facts about poor job growth continue to drive down his job approval numbers. Today’s report that the U.S. poverty rate is now at the highest point since 1993 is one more troubling data point voters will consider when grading Obama’s performance.

If judging the results of economic policy were like the Olympics, Obama could call on the East German judge for a lift. But as it stand, facts are facts, and the statistics brought to bear by GOPLabs are difficult to mitigate after more than two years of executive ineffectiveness.


[image courtesy of @GOPLabs]

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