Iowa Caucuses: Solution Providers Seek Relief From Surging Benefit Costs

As Democratic candidates try to craft a message around worker benefits that appeals to voters, small business owners say they feel left out of the conversation.

Iowa solutions providers and those with customers in the Hawkeye State told CRN they hope those candidates who back generous family leave and benefit programs take into account the impact those policies have on small business owners.

“With salaries getting higher, the benefit and taxation requirements are becoming higher and higher every year and it makes it harder to maintain the business,” Jason Erickson, chief operating officer at ThinkSpace IT in Harlan, Iowa, told CRN. “We have to keep charging more, simply because we have to keep providing more. Healthcare is a major issue with us as well. The cost of health care has exploded. What we used to pay, per-employee five years ago, we’re almost paying three times that now.”

The first vote of the Democratic presidential primary is poised to happen Monday as Iowa voters take to the polls to choose which candidate wins the contest and takes the momentum, as well as the lion’s share of delegates, to New Hampshire. Whether it’s family leave plans to care for loved ones, maternity leave, or an individual’s medical leave, solution providers said they have not heard any candidate discuss how they can help small businesses afford the benefits that their campaigns are promising.

“We keep hearing that the business is going to pay for it,” he said. “The small businesses, honestly, we can’t afford it.”

Mark Meyer, president of Inteconnex in Cedar Rapids, Iowa, operates a large physical security business, primarily selling surveillance and access control solutions to enterprise customers. He said a roaring economy, and bigger education budgets have been a boon to his revenue so the best candidate will keep the economy healthy.

“For me personally, it’s really making sure the economy keeps growing. That’s the number one thing for us,” he said. “We do a lot of school districts, universities, a lot of government, local, state, and local government type operations. They’ve all had good funding, especially through the federal government to install physical security systems, especially in schools and public housing and things like that. We’ve been very pleased with the way things have been going so far. I’d hate to see that go away.”

Inteconnex even managed to get a bump out of last year’s trade war threats, Meyer said, as two Chinese manufacturers were banned from selling surveillance equipment in the US.

“That actually helped level the playing field. We don’t sell Chinese-manufactured equipment, and it was significantly cheaper,” he said. “It wasn’t as good in terms of quality, but often times customers don’t understand that.”

There are a total of 49 delegates up for grabs in Iowa, with 41 of those allotted by the share of the vote that a candidate captures in the caucus. While an early win in Iowa can springboard a campaign, it isn’t always an indicator of who will run in November. In 2016, U.S. Sen. Ted Cruz (R-Texas) won Iowa. In 2012, Rick Santorum edged out U.S. Sen. Mitt Romney (R-Utah) by 34 votes.

While some solution providers saw no impact from tariff threats, Erickson said his shop could do with more stability around trade.

“The thing that surprised me was most of the problems came from American companies overreacting to tariffs, where they just stopped ordering,” he said. “They’re in a wait and see and then all of a sudden there was no product to be purchased and sold. The threat of the tariff was more problematic than the tariff itself.”

Erickson would like to hear candidates talk more about regulating IT certifications. In an industry that holds a person’s most precious data, that is already beset by security woes, he said a lack of governmental certification is a “rampant problem” that no one is talking about.

“There are more requirements to become a hairdresser than to become an IT professional. I would say certifications, background checks, security are all top issues,” he said. “We have an entire industry of people who are responsible for our data. Bank accounts, company data, all that, but there’s no requirements for security at all. These guys could have gotten out of prison yesterday as far as anyone knows.”

Zac Paulson, CEO of True IT, an MSP based in North Dakota, which has several customers in Iowa, said health care coverage costs a fortune, and the candidates barnstorming the Hawkeye State are only adding to the burdens they are placing on businesses like his.

“Family leave and benefits sound great, but it hits particularly hard at the small business. None of that stuff comes free,” he said. “We have about 50 people and that puts a huge crimp on my ability to afford staff.”

However, he said sometimes the extra red-tape cuts both ways.

“On the flip side in IT, every time health care gets a regulation, we get money because they have to implement more stuff, so its kind of a catch-22,” Paulson said. “I hate the idea of more regulations, but a lot of those regulations do force health care organizations make changes to their infrastructure.”