Perspectives: Protecting The Industry From Unintended Consequences
This year we had a most successful PPAI Expo, drawing over 20,000 distributors, suppliers and industry associates from across the country and around the globe. The show now encompasses over one million square feet at the Mandalay Bay Convention Center in Las Vegas, and each year becomes more experiential. Kudos to the PPAI staff for engaging attendees in activities that helped them to develop relationships that will last a lifetime and helping them to provide better, sustainable and more creative branding for their customers while supporting the Association and industry.
In my most recent PPB article (January 2020), I wrote about PPAI’s strategic plan and the first area of focus by our Strategic Foresight Committee: the changing industry profile. The committee’s second area of focus addresses state and federal regulations and legislation that burdens small businesses.
On the surface, government regulations and legislation are usually beneficial; they create fairness, provide safety and raise tax revenue. However, there is a simple paradigm in business and government called “the rule of unintended consequences.”
Occasionally, regulations create burdens on small businesses by causing the opposite effect of fairness, safety and an increase in tax revenue. A few regulations that your Association is concerned about include Prop 65, independent contractor status, the Stop Wasteful Advertising by the Government (SWAG Act, senate bill 2722), tariffs and duties, and sales tax.
Prop 65 – This California regulation identifies and regulates 900-plus chemicals found in various consumer products. Enacted in 1986, the requirements undergo periodic updates—most recently in August 2018. While PPAI is all-in for product safety, we want to be sure there is a practical side to its implementation.
Independent contractor status – Section 530, the Safe Harbor Rule, is being replaced with more stringent guidelines for defining independent contractors. California Assembly Bill Number 5, a new law that went into effect on January 1, is posing challenges for many of the industry’s distributor companies. We need to stay on top of this because many salespeople in the promotional products industry work as independent contractors. All member companies, even those outside of California, should become familiar with this new legislation. And action on this issue isn’t limited to California—we are seeing movement on this topic in a number of states as well as on the Federal level with the PRO Act.
SWAG Act – Although I doubt there’s a politician who hasn’t been elected without using lawn signs, bumper stickers and campaign buttons (think of our current president’s use of promotional products), our medium was targeted by this bill. Our Association swiftly met with the bill’s sponsors and made a persuasive case citing the ROI of promo products and continues to work with them to redirect the bill’s intent in a positive way.
Tariffs and duties – These taxes raise the cost of Chinese goods and therefore increase buyers’ marketing costs—in some cases, unreasonably. Often there is not a domestic alternative to Chinese-imported products. Tariffs could ultimately hurt the domestic promotional products industry and adversely affect safety if buyers purchase from non-compliant sources.
Sales tax – Brought about by the Supreme Court’s ruling on South Dakota v. Wayfair, Inc. in mid-2018, this ruling penalizes smaller companies by requiring them to file sales tax returns in every state to which they ship products.
These are just some of the regulations that PPAI is involved in on behalf of our 16,000 member companies and the industry, and form the basis for conversations with legislators during our annual May program, Legislative Education And Action Day (L.E.A.D) in Washington, D.C., part of PPAI’s industry-wide Promotional Products Work! Week. Through this program, our members have a voice on issues that matter to this industry. PPAI engages a lobbyist on the industry’s behalf and is also working at the state level to make sure the industry’s voice is heard and fairness is applied.
Although the sign-up period for this year’s L.E.A.D. has passed, please consider adding your voice and supporting your colleagues’ work through the Virtual Fly-In that will help you send letters and emails to your local and state-elected officials and make social media posts. PPAI will provide you with a different daily message to share with your elected officials during L.E.A.D. on May 6-7, 2020. Being aware can often stop a well-intended but misguided piece of legislation or regulation that could result in what I referred to previously as “the rule of unintended consequences.”
We are more than 16,000 members strong—let’s network for the good of the industry. We have a voice through you.
Ira Neaman, MAS, is chair of PPAI's Board of Directors, and founder and president of Avenel, New Jersey, supplier Vantage Apparel.