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Sequestration Threatens One Business Owner's Hiring Plan

6:40 PM, Feb 22, 2013   |    comments
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Andy Stern

ROCKVILLE, Md (WUSA9) -- Economists and politicians have been saying for years that small businesses are key to  American economic recovery.

But sequestration could smack small businesses hard, costing them billions of dollars and hundreds of thousands of jobs.

The looming budget cuts already have one local business leader re-thinking his hiring plans.

"It's been a horrible four years for small businesspeople. I mean, the worst," says Andy Stern, owner of Andy Stern's Office Furniture, and chairman of the Greater Bethesda-Chevy Chase Chamber of Commerce. 

Before the Great Recession, Stern says he sold $8-million dollars of office furniture a year from four locations across the region. "I've been in business 36 years, and this is the worst four years I've ever seen."

The recession cut his sales in half. "You didn't pay yourself for a year?" "No, a whole year, nothing." "Geez." "That's what you do when you're a small business."

He had to lay off an employee and he says it was the hardest thing he's ever done.

Now, just sales are starting to pick up, sequestration threatens. "The last several months, we've been thinking about that." "Hiring someone?" "Yes." "And with this?" "No! Absolutely not. The risk is too great, too uncertain. And again, uncertainty in business is a bad thing."

Federal plans for billions in across the board spending cuts reversed what had been slowly growing confidence among millions of small businesses. "This, I think, just puts a big wall between that," says Stern.

Maryland has 130,000 federal employees alone, a facilities like the massive FDA complex. Those workers are looking at furloughs that could cost them 20% of their pay. And federal contracters are facing similar cuts.

"This is a meat ax," says Gigi Godwin, president and CEO of the Montgomery County Chamber of Commerce. "And the devastation to our innovation economy cannot be overstated." 

Many businesspeople, including Stern, worry about the federal debt -- but Stern says sequestration is the wrong way to deal with it. "You can't sort of slash across the board. No business does that. No one says, ok, I'm going to cut everything 10%. You're not going to cut your best salesman by 10%."

He says that's bad business -- and bad government.

Economist Stephen Fuller at George Mason estimates sequestration might cost the country 1.4 million jobs -- and he says half of them will come from small business.

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