Family businesses continue to anchor America’s economy.
Every year we conduct research on America’s largest private employer: Family business.
Both large and small, family businesses account for nearly 60 percent of private employment in the country, according to research by university professors from the University of North Carolina at Charlotte and Kennesaw State University.
This adds up to an annual $7.7 trillion economic contribution to our gross domestic product and 83.3 million jobs.
Family business is no small business.
As family businesses grow, prosper, and add jobs even in the face of inflation, burdensome tax policies, and pandemics, few in Washington DC really understand the power of this “quiet giant,” or its massive positive impact.
The absolute power of family business became clearer in new research from Family Enterprise USA’s Annual Family Business Survey 2023. The survey was conducted in the first two months of this year and polled 571 family businesses and family business centers across the country.
Some very interesting findings came out this year’s study, not the least of which was, despite the whip-saw economic environments of high inflation and hard to find labor, 74 percent of multi-generational family businesses have succeeded for 30 years or more, 65 percent expect to grow in 2023, and 71 percent saw their business increase in 2022.
In addition, nearly 40 percent of the respondents had revenues of $21 million or more, the survey found. Family businesses cover a broad range of industries. Some 26 percent are in manufacturing, 14 percent in construction/facilities, and seven percent in real estate. Agricultural businesses make up five percent of respondents.
This is all good news, considering the daily layoff announcements, the double specter of recession and inflation, and regular spikes in interest rates.
Though family businesses are diverse, and big, they tend to be friendly places to work too.
The survey found 91 percent of family businesses kept jobs during the last pandemic year, and 61 percent added jobs during our recent high-inflationary period. Only nine percent of family business respondents lost jobs.
When it comes to wages, 46 percent said they pay “above average” wages and benefits and 72 percent said they have “generational employees.” These are employees that work for family businesses for multiple generations and are not related to the family business owners. Few major corporations can boast this kind of employee loyalty.
Family business are also big givers.
The survey found 82 percent donated funds to local charities or local chapters of national charities. Simply, family businesses have deep, deep roots in America’s communities.
But there are concerns, the study showed.
Income taxes and labor worries the top list.
This year’s report registered the biggest worry in tax policies, with 50 percent of respondents saying high personal income taxes were the number one concern, up from 45 percent a year ago, an 11 percent jump.
Another primary concern was finding, training, and keeping employees, with 31 percent of family businesses saying this was a critical concern. Shifting “market conditions” were also a key worry, with 30 percent of respondents citing it as a main hurdle.
Let’s not kid ourselves, there are many issues facing family businesses of all shapes and sizes.
The virus of increased inflation, the shadow of recession, and supply chain bottlenecks all registered high among survey respondents.
Nearly three-quarters of family business (74 percent) said inflation “hurt profitability” and 86 percent said supply chain disruptions were still top of mind as a critical issue.
Some 19 percent of the respondents said the “most important” tax issue was to reduce personal income taxes, while 18 percent said reducing the Estate Tax, or The Death Tax, was a priority.
When it came to changing the Estate Tax provision, 33 percent thought it important to keep it “as is,” while only 24 percent said this a year ago.
The good news is that family businesses can adapt faster and easier than larger corporations. The bad news is they are often at a disadvantage tax wise, therefore missing out on many corporate tax breaks.
But good news is coming to family businesses.
This time it’s from Capitol Hill.
Though government policy issues ranked low on family business radar, except for taxes, a new bipartisan Congressional Family Business Caucus may help raise the profile of this quiet economic giant.
The new bipartisan Family Business Caucus held its first meeting in February with co-chairs Henry Cuellar (D-TX) and Claudia Tenney (R-NY) speaking to a group of family business owners, caucus sponsors, and other congressional leaders. The other caucus co-chairs are Representatives Jodey Arrington (R-TX) and Brad Schneider (D-IL). The next meeting is May 16,
Educating Congress on the power of family businesses is key to helping family businesses thrive. Few in Washington DC know or understand this hidden power. Congress needs to know the basics of family business in America.
The message is getting out that the quiet giant is awakening, and these new numbers will only help make the voice of family business louder.
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The need for fact-based reporting of issues important to multi generational businesses and protecting a lifetime of savings has never been greater. Now more than ever, multi generational businesses and family businesses are under fire. That’s why Policy and Taxation Group is passionately working to increase the awareness of issues important to generationally-owned family businesses built on hard work, while continuing to strengthen our presence on Capitol Hill. Those issues include Step Up in Basis, gift tax, Valuation Discounts, Capital Gains Tax, Income Tax Rates, Wealth Tax, & Estate Tax (death tax).
Policy and Taxation Group is the leading information, education and advocacy organization working for the reduction and ultimate elimination of estate tax, gift tax, and generation skipping transfer taxes, and other taxes that punish hard work and success. Our Mission is to challenge hostile tax policies that meaningfully and measurably impact families and limit the ability of family businesses to remain family owned. We work with Congress in Washington DC against high Income Tax Rates, possible elimination of Valuation Discounts, increase in Capital Gains Tax, enactment of a Wealth Tax, and the continued burden of the Estate Tax (death tax), and the possible elimination of Step up in Basis.
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