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Mass. Small Businesses Entering the Danger Zone
by
Jon Hurst and Mark Melnik
With a mix of rising operational costs and demographic factors, the small business community in Massachusetts is at a critical inflection point. That is the starkest takeaway from a recent survey of 635 small businesses across the Commonwealth, in which businesses report they are struggling to make ends meet under a sea of rising costs post the COVID crisis.
To be sure, multiple studies have demonstrated the “cost problem” in Massachusetts. For consumer-serving small businesses like stores and restaurants, the high cost of living not only hurts sales, but also increases the cost of opening the doors, employing staff and serving consumers. The result is that more and more small establishments are operating in the red.
But as the UMass Donahue Institute’s Economic & Public Policy Research group recently found, the cost problem have gotten much more complicated for local businesses (insert report link). In our recently completed study surveying members of the Retailers Association of Massachusetts and other small business associations, we found that most businesses in Massachusetts (71%) have seen sales increase or remain steady since the pandemic. However, 44% of businesses responded that their overall profitability has decreased over the same period. Operational costs have increased for 91% of respondents in our study, with 76% confirm that their costs are rising faster than sales.
Business owners were asked to list the most negative impacts of running a business in Massachusetts. Five of the top six responses pertained directly to cost, including the general cost of living, electricity, interchange fees, payroll taxes, and health insurance premiums (the availability of labor was the other issue in the top six). Taken together, this data shows how cost sensitive small business owners are and how inflation and the rising costs of business operations, particularly around health care and energy, are impacting small businesses around the state.
Gov. Healey Files $62B FY26 State Budget Plan:
Proposes Sales Tax on Candy, New Synthetic Nicotine Tax
In January, Gov. Maura Healey released her FY26 State Budget Recommendation, which proposes to spend more than $62 billion in the upcoming fiscal year that begins on July 1, a spending increase of 7.4% over the bottom line of the FY25 budget she signed into law in July. As she did last year, the Governor again this budget cycle is seeking to pair her plan with a separate municipal tax package that would allow cities and towns to increase local option taxes on room occupancy, auto excise, and meals. Gov. Healey also filed a supplemental spending bill, H.51, making appropriations in the current fiscal year, FY25, utilizing excess surtax, or “Millionaire’s Tax,” revenue left unspent from FY23 and FY24. The $1.32 billion supp divides the spending between $858 million for transportation needs and $462 million towards education items. Click here to view a few specific tax policy changes of interest to RAM members.
Healey Administration Agrees to UI Deal to Resolve $2.5B Mistake:
Employers Will Pay
The looming $2.5 billion UI liability question that had been hanging over employers’ heads for over 18 months has been answered, with news in January of a deal between the state and the federal government. Under the recent agreement negotiated by the Healey Administration, employers will be required to pay back $2.1 billion over the next decade, to correct an error made during the Baker Administration when federal funds were incorrectly spent. The agreement was signed on one of the last days of the Biden administration. RAM reacted:
“It’s discouraging we have to pay for this,” RAM President Jon Hurst said of the latest settlement. “The fact that we have what is frankly a collapsing system even without this additional $2.1 billion, and adding to the fact we’re still paying the $2.7 billion from the prior administration, and now this, all for claims [related to pandemic-era mandatory shutdowns] that were really the government’s fault, not the employers’ fault, it’s a tough thing, it’s very costly.” On the plus side, Hurst said he’s hopeful “that it appears there’s some willingness to talk about reforming the system. . . . Maybe this will be a tradeoff that employers will see as worthwhile.”
RAM will continue to advocate for the state to cover some of the costs associated with this mistake and will continue to push for meaningful UI reforms this legislative session.
RAMHIC Offerings for 2025
RAMHIC continues to partner with Blue Cross Blue Shield of Massachusetts to offer members access to the carrier's entire portfolio of high quality, small group health insurance plans.
All members purchasing their health insurance coverage through the cooperative will also receive an expanded list of ancillary benefits, FREE of charge.
Click image above to view a BCBS produced informational video on the power of the RAM/BCBS Cooperative.
Please see our brochure for more detail on the expanded benefit package. Specific information regarding each benefit may be found below:
For more information please visit the RAMHIC page of our website.
We are excited to announce we have enhanced our Multiple Employer 401k (MEP) program. Available only to our members, we have a new partner, Transamerica Retirement Services. Transamerica is an industry leader in retirement plan marketplace and an expert in Multiple Employer 401k Retirement Plans.
In addition to Transamerica, you also have professional fiduciary investment management provided by Atlas Fiduciary Services, Inc., and outsourced fiduciary plan administration through Atlas Pension Administrators Inc. All of this and you can work with an advisor of your choice.
Adopting members will experience:
- Fewer plan administration duties
- Reduced fiduciary liability
- Streamlined costs.
- Flexible plan design
- Online account management
- Employee education and communication support
Now has never been a better time to set up a new 401k plan for your business! The federal government has tremendous tax credits for newly established plan, virtually making the prospects of offering a plan free.
If you already have a plan, a quick evaluation can help determine what your saving might be under our MEP 401k plan with our complementary benchmark analysis.
expires at 12pm Friday, April 4
2025 RAM Fixed Rate Electricity Supply Program
RAM has teamed up with electricity broker Freedom Energy Logistics (FEL) and electricity supplier First Point Power (FPP) to offer RAM members a 24-month Fixed Rate Electric Price from November 2025 through October 2027.
This fixed rate program is designed to protect you against unexpected price fluctuations commonly experienced in the electricity market. This allows members to confidently budget their annual electricity costs.
While the program’s offered price is competitive, RAM cannot guarantee it will be the lowest price option available to you. Prior to enrolling in this offer, members are advised to first check that they are not currently under a long-term electricity supply contract with an expiration date beyond October 2025. Enrolling in this program while still under contract may result in you incurring early termination fees.
UPDATE: Treasury Suspends Enforcement of the Corporate Transparency Act
The United States Treasury Department has announced that it will not enforce the beneficial ownership information (BOI) reporting rule of the Corporate Transparency Act (CTA) which required businesses of all sizes to disclose specific and sensitive information about individuals with ownership interest in the company. Under the announcement, small businesses that do not file required BOI reports by the March 21st deadline will not be subject to fines or penalties. Despite this decision by the Treasury, efforts to fully repeal the CTA are ongoing.
MA Attorney General Campbell
Finalizes “Junk Fee” Regulations
MA AG Andrea Campbell recently released final “junk fee” regulations that will take effect on September 2, 2025. The AG’s Office described the regulations as requiring businesses to be more upfront about fees, enable easier cancellation of trial offers and subscriptions, and to prevent unnecessary charges.
The regulations can be found here. A summary of the regulations can be found on the AG’s website here.
All members are encouraged to review the regulations and related summary documents to ensure future compliance.
Legal Age of Purchase
Members are advised that they may soon receive a solicitation from Citizens for Adult Choice (C4AC) inviting them to sign a joint letter in support of the Legal Age of Purchase (LAOP) legislation. This letter, which will be sent to Massachusetts House and Senate leaders, advocates for codifying the legal age for age-restricted products in our state. Your participation is essential to demonstrating robust industry backing for this initiative. Please note that RAM is a part of the C4AC coalition and has previously signed on to an industry association letter in support. Please feel free to contact the RAM office with any questions.
Thank you for your attention and support.
MA Legislature Sees 7,000 Bills Filed for this Session:
RAM focused on targeted industry priorities
The 2025-2026 MA state legislative session is now underway, and legislators have nearly 7,000 proposed bills to comb through. As every bill in MA is guaranteed a public hearing, the joint committee review process will continue into the fall. RAM will be focused on promoting public policy decisions that can result in higher sales and lower costs for our members. Click here to view bills, filed at RAM’s request, look to further that agenda.
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