Middle-class consultant, worthy of a tax break

Eric Marburger is one of my croquet buddies, a part-time human resources expert working with the Mountain States Employers Council, and an entrepreneur HR consultant with private clients.

Marburger started his business, ESM Consulting Services, twelve years ago to supplement his and his wife Helen's income after the couple arrived in Colorado in 1998.

It was a good gig. Helen's position came with medical-insurance benefits, so Eric's tiny business and the Mountain States part-time work gave him the schedule flexibility he wanted in his work life. Together the couple made a good middle-class living.

"I don't want to work 60 hours a week," Marburger told me. Or "try to make as much money as possible."

Then came the Great Recession. Helen lost her job in February, but the couple continued their health-insurance through COBRA, the safety net that allows you to keep coverage provided by your employer's health plan as long as you can pay the full premium for the insurance.

As a human-resources expert for hire, Eric has had to know the ins and outs of health-insurance coverage, employee compensation, employee retention and terminations, other benefits and the whole range of HR chores within a company. His specific expertise is compensation, and you can tell he knows the subject well when he discusses problems employers regularly encounter in a down economy:

"There's only so much money organizations have for their employees," he said. "I tend to work with firms and organizations where personnel services might be 80- to 85 percent of the total expenditures for the company. Well, if health insurance is going up, let's say 12 percent, which is probably what it's averaged over the last few years, there's not a lot of money left over for pay increases or for any other additional benefits that might be wanted by the employees or even by the management of the company."

In other words, Eric Marburger knows the crossroads of operating a business profitably where rising health-insurance costs, declining sales, employee demands amid reduced numbers of workers (layoffs), and government regulation pull a business owner in multiple directions. As a sole-proprietor of his own consulting service, Marburger also makes a good example of a businessman dealing with all the push-and-pull that 21st century business entails nowadays. And this is a man who doesn't want to work 60 hours a week.

But Eric has been busy lately. We don't see him on the croquet court as often as we once did. His part-time work as a business consultant for Mountain States (about 20 hours a week or more) and the revenue he generates from his small consulting business (about $30,000 a year) is far more important to his family income now than it was before the recession. And like any good entrepreneur he is broadening the spectrum of services he can offer a client.

"I've tried to diversify my areas of expertise a little bit," he said, "just kind of make myself a little more valuable generally."

Making himself more valuable to the family, as well. For example, with Helen's layoff after 12 years at her employer, Marburger knew his family could qualify for a reduced health-insurance premium through a subsidy created by the economic stimulus package passed by Congress in 2009.

"We're paying $460 a month for probably a $1,400 insurance plan," he said, but the subsidy runs out next spring, as does his wife's COBRA coverage, so the couple is going to have to figure out a way to pick up new health insurance on their own, perhaps with a new insurer.

That's why learning the changes businesses face with the onset of national health-care reform becomes a large part of Eric's effort to make himself more valuable. He can help himself, his clients and his family all at the same time. And maybe even make more money.

Nevertheless, Marburger never expects to be one of those small-business owners with family incomes above $250,000 who might be taxed more heavily if Bush-era tax cuts for the wealthy are allowed to expire in December. Republicans and some Democrats (I betcha they're the wealthy ones!) want to renew the tax cuts for the rich, but the Obama administration wants to limit the renewals to the middle classs.

President Obama's opponents on the issue argue that small-business owners who pay taxes on their profits through their personal income-tax filing will bear the brunt of the increased taxes on the wealthy, and, therefore, limit their ability to hire new workers at their small businesses.

To be quite frank, and since I'm a blogger and can use more colorful language than I could in a newspaper or a magazine, that argument is pure bullshit.

Small-business owners who include business profits on their personal-income tax forms are more often sole-proprietors like Eric Marburger, and they fall far short of the $250,000 income level that would be subject to restored higher taxes.

Marburger is a compensation expert. He agrees with me that the small-business owner who makes enough money to be be placed in the $250,000-or-higher tax bracket is a rare bird, indeed.

"I've certainly worked with folks that earn $250,000, but they're not small-business owners," Marburger told me. "They're executives of larger organizations. I've worked with a lot of health-care companies, hospitals and corporations, ... [and] the executives are the ones earning over $250,000 a year. I don't know that I've worked with any small-business owners that would fall into that category."

He also said his own income from private clients for the past few years amounts to about 30 percent of his annual take-home pay, which falls far below the $250,000 level. "Not even close," Eric said and laughs. "Not even close."

While I was a full-time business reporter and writer, I avoided doing profiles of business consultants because I considered them less than substantive parts of Colorado's economy. Self-employed contractors who don't employ others usually have little influence on the economy and, therefore, are often ignored by business journalists.

Now that I'm a self-employed journalist and wannabe consultant, I have a different perspective.

It's still true that small businesses with employees are the job-creators national, state and local governments are trying to stimulate nowadays to hurry up the nation's economic recovery.

But it is also true that the self-employed contractor -- a carpenter, electrician, even a business consultant -- is among those who suffer the effects of a business downturn, much like the unemployed who get laid off from small companies and larger ones as well.

The self-employed also add to the recovery when they get work as an economy improves. As Obama says over and over, we're all in this together. The rich people who made money during most of the Bush era leading up to the nation's latest economic downturn may have to give back a little of it to put a bunch of middle-class business consultants, construction workers and professionals back on the job.

Furthermore, if you've been making $250,000 a year through the downturn, it seems like a small price to pay for the privilege.

Pledge to the same ole

Did it look to you -- like it did to me -- in  the pictures of John Boehner giving his "Pledge to America" that the goof ball may be losing a little of his oft-mentioned tan?

I looked for a picture of Boehner to illustrate this contention, but found only that I am not the only one who writes about his tan. There's a whole page of references on Google to "John Boehner tan," so you can look it up yourself if you don't believe me.

To me, though, it looks like Boehner's work on the empty pledge took a little color out of him.

According to the New York Times version of Boehner's presentation yesterday, the pledge is about as empty-headed as the Republicans' two years of opposition to anything Democratic that has been introduced in Congress, or anything at all Obama, for that matter.

So, this from the Times' David M. Herszenhorn: "The approach Boehner set out is based on a belief that smaller government, lower taxes and less regulation will fuel economic growth, create jobs and ultimately lead to a more prosperous nation. It deviated little from the tenets of mainstream conservatism over the last generation."

Now, for a minute here, I'm going to sound like a Democratic politician facing a tough mid-term election battle or a lot like other Democrats including former President Bill Clinton who are taking up this cudgel in response to Tea Party invective: Were not the "tenets of mainstream conservatism over the last generation" what got us into this whole mess in the first place?

Free-market capitalism and less regulation led to greedy real-estate mortgage brokers and exceedingly rich Wall Street bankers.

Lower taxes led to a let-the-rich-get-richer recovery from the Internet recession of 2000-2001 that, if you recall, remained remarkably "jobless," resulting in more jobs lost during the first four years of George W. Bush's reign than his second-term administration was ever able to regain.

In effect, the 2001-2008 recovery showed only that a president could allow an economic downturn to have its way with the American middle class while he also waged two wars and turned a national budget surplus into a withering record deficit. And don't let it be forgotten that it was George W. Bush and the Republican majority in Congress who grew the government to the size that now Republicans want to butcher.

Herszenhorn also quotes conservative analysts as saying the $100 billion Boehner promises to cut from federal spending would hardly make a dent in the current $1.3 trillion deficit. 

So a much paler-than-normal Boehner made a pretty pale pledge to America. He was promising more of the same ole, same ole Reagan/Bush conservatism that history has shown does no favors for America's middle incomes.

The sooner Americans -- and perhaps even Ohioans -- reject John Boehner's empty promises, the sooner  the good-ole-boy congressman can get back on the golf course to burnish up that trademark tan.

South Colo. schools first piece of recovery pie

San Luis Valley schools are to get the first $87 million from a state/federal capital construction program that could help put Southern Colorado small businesses to work.

No one has said anything yet, but it's no coincidence that the governor's "economic recovery team" kicked off a statewide tour in Trinidad, San Luis, Walsenburg and Pueblo to promote small-business and minority-business involvement in contracts that are being cut with stimulus funds coming from the Obama administration.

"Leveraging the American Recovery and Reinvestment Act funds is one way to help Colorado emerge from this economic downturn faster and stronger," Gov. Bill Ritter said in a statement announcing the tour, led earlier this week by Maranda Pleau, the governor's director of Minority and Small Business Outreach for the state's recovery team.

On Thursday, two days after Pleau first met with small business people on the tour, State Treasurer Cary Kennedy announced the $87 million in financing for school construction between the towns of Hooper and Mosca in Alamosa County, in Alamosa itself, and outside Monte Vista in Rio Grande County.

Pleau answered her own phone when I called her Friday morning shortly before a scheduled staff meeting, but she begged off talking to me about the relationship between the tour and the school-construction funding, saying she had the staff meeting to go to, but also that whatever she had to say had to be cleared through her communications director.

As I said, I have not talked with the outreach director yet, but she said she would be happy to share her thoughts on the subject. I sent her an e-mail asking what she is telling small business owners in the region where the funds are being spent, especially since it's known that few minority-owned businesses have in the past enjoyed participation in large state contracts for capital construction, road building and the like.

Pleau's appointment, in some ways, was a response to complaints from some leaders of the minority business community in metro Denver that minority-owned businesses weren't getting many state contracts, or even encouragement, after two years of Gov. Ritter's adminstration.

Specifically, the Colorado Black Roundtable met with Ritter in February to share concerns that the state was effectively "missing in action" for the first two years of Ritter government when it came to economic development of African-American owned businesses in Colorado, according to Herman Malone, a Republican who attended the session with the Democratic governor.

"He was telling us what he couldn't do," said Malone, who also is my co-author in writing the book "Lynched by Corporate America," which was published in 2006.

Andre Pettigrew, executive director of the city of Denver's Office of Economic Development, told me he hoped Pleau's appointment to the economic recovery team was partly a response to that meeting, although the appointment didn't come until mid-summer.

"I'd like to think the governor, Don Elliman [former state economic development director and now chief operating officer of the state] and that team," Pettigrew said, "that they went out and listened to businesses in our community, that they knew there was an opportunity and an expectation that those communities were going to contribute" to the state's economic recovery.

" ... Our success is going to be measured on whether or not these businesses, these contractors are growing, that they are a vital part of it," Pettigrew said.

Elliman also is chair of the Colorado Economic Recovery Accountability Board, which Ritter appointed to oversee the spending of federal stimulus money. Pettigrew is a member of the board, too, and he told me he has addressed the board on the issue of minority-business participation in spending the government funds.

Pleau's responsibility is to see that minority-owned businesses, women-owned businesses, and other small businesses are included. Let's hope the small business owners she meets with on the recovery team's tour around the state listen up and make sure they get a piece of the action.