Sometimes, a family business is owned by several families along the way. Such is the case with Pini Ace Hardware in Novato, which is celebrating its 100thanniversary this year.
Charles Young, surrounded by sons Tom, Russ. and David
Russ Young, Pini’s CFO and treasurer and a member of the third generation of his family to own and operate the landmark hardware store, said the business started in 1918 when Henry Pini, a Swiss immigrant, opened a general store in the Marin County community. The store initially sold dry goods and groceries, but soon added hardware. A few years later, the store moved down the street and expanded to sell hay, grain, feed, coal, clothes, hardware, and groceries, along with fresh meat, chicken and eggs.
In 1929, Pini built a modern store and became one of the largest employers in town. But shortly after he died in 1942, his widow, Mary, sold the business and the rights to use the name to three local men, who jointly owned it until 1968, when Russ’ grandparents – Ben and Ellarene Young – and the Saunders family partnered to buy it. Charles Young and Steve Saunders purchased the business from their parents in 1983 and the Young family bought out the Saunders’ interest in 2015. Today Charles and his three sons – Tom, Russ, and David – are the owners.
Like many retail businesses, Pini competes with big-box stores that can offer larger selections and often lower prices. But being a family business is an important asset if you’re David taking on Goliath.
“We can provide customer service but they’re too big to do that,” Young said. They can’t provide the personal attention we can.
“We’ve been really lucky so far. People have embraced our store. We’re community-oriented and at one with the town. And we have better relations with our staff. We’re kind of a big family. We care about our employees and we want them to be happy in their job. We don’t have huge corporation rules.”
Pini has one manager who has been with the company for more than 45 years and several others who have worked there between 15 and 20 years.
And as Young said, the family is deeply involved in the community. They hold a number of sales events each year, participate in events with the Chamber of Commerce and other organizations, and are involved in fundraisers for schools and youth groups.
One of the highlights of the year is the store’s participation in the annual Fourth of July Parade, when family members and staff – and even some customers – march and do routines while swinging plungers. He said one year they decided not to participate and customers let them know in the months to come that they expected them back in the next parade.
Charles Young remains involved with the business and works a few days a week. Russ said he’s very business-savvy and gives his sons great advice on how to handle things. Older brother Tom is the COO and handles inventory, while younger brother David manages the sales staff and ensures they have the training and skills to keep the floor running smoothly.
While the brothers “bleed retail,” like many children they struck out on their own for a few years, managing drug and variety stores and in Russ’ case owning his own business for a few years before joining the family business permanently. Now, the fourth generation is already involved, with Russ’ nephew running the front office. And younger brother David has five children so there’s hope there as well.
The family joined FBA earlier this year in part to promote the importance of family businesses.
“I don’t think people understand what family businesses bring to the table and how important they are to the community. How many of the big boxes are involved in local organizations, with local banks? Consumers love the giant warehouse floors, but I don’t think they understand how much more family businesses give back to their communities,” he said.
He said the legislation proposed by Sen. Scott Wiener, D-San Francisco, last year that would have created a state estate tax – defeated after FBA created a broad-based coalition to oppose it – is a good example of legislation that would have really hurt family businesses.
“FBA is beneficial to keep people aware that family businesses are important cornerstones of the economy and the communities we live in.”
Elliot Eisenberg, Ph.D. | GraphsandLaughs, LLC | April 2018
Elliot Eisenberg
During every business cycle, economies experience job losses followed by subsequent job gains such that, in time, all job losses are made up, and then some. Between January 2008 and February 2010, almost nine million jobs were lost, but by January 2013 the number of employed Americans had almost fully recovered. The typical good news story, right? Not so fast; the educational attainment of the persons employed in the “recovered” jobs were dramatically different than those in the “lost” jobs. This has profound social and economic implications.
While total employment was virtually unchanged in January 2008 and January 2013, millions of workers without college degrees lost jobs and never regained them. For example, the number of employed Americans with less than a high school diploma fell by roughly 1.6 million; the number of high school graduates with jobs fell by about 2.8 million; and the number employed with some college, but no B.A. fell by 225,000. Over that same five years, the number of college-educated Americans with jobs increased by more than 4.3 million!
In the next five years of the expansion, years 2013 through 2017, job growth improved: 10.7 million jobs were created. While every educational group saw gains, the distribution was again severely skewed towards those with more education. Those with less than a high school diploma picked up 744,000 jobs, those with a high school diploma added 720,000 jobs, and employees with some college saw employment gains of 1.6 million. However, college graduates scooped up 7.6 million jobs, or 71% of all new employment, despite being just 36.5% of the labor force in January 2013.
In short, college graduates gained twice as many jobs as predicted by their share of total jobs in January 2013. And that percentage was already meaningfully higher than the 33.6% that it was on December 2007, the eve of the Great Recession. As a result, the share of jobs held by the other three educational groupings declined. It fell by a whopping 22% for those with less than a high school diploma, 11% for those with a high school diploma, and by just 4% for those with some college (and this includes those with two-year degrees). More education clearly mitigates these negative employment trends.
What is so troubling is that Americans without college degrees, who currently comprise 60% of the labor force, lose employment opportunities regardless of where we are in the business cycle. Worse, many of the less-educated men who lose their jobs drop out of the labor force, depriving the economy of millions of workers. At the same time, the national unemployment rate is at a generational low, and employers are desperate for skilled labor. We will soon reach a point where GDP slows simply because of a lack of available workers.
Even though a college education is immensely helpful, pushi
ng all high schoolers to go is a disservice. Worse, telling those that do not go to college that they are failures just compounds the problem. As a result, more students go to college than ever before, but only 57% of college freshmen complete their degree within six years; many never finish. College should be seen as one option among many.
Another approach is to increase the number of apprenticeship programs. At present, just 0.3% of the total US workforce is in a registered apprentice program, while in Germany it’s almost 4%, 12 times higher! These jobs pay well, and their graduates are far more likely to be fully employed.
The nature of work is changing, and new jobs increasingly demand better skilled workers. Earning nothing more than a high school diploma all but guarantees low wages and long spells of unemployment. While college is an excellent solution, stigmatizing those that do not go is harmful. To that end, giving high school graduates who are not interested in college a wider variety of ways to gain vocational skills and demonstrate employability is critical.
Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70-word economics and policy blog can be seen at www.econ70.com. You can subscribe and have the blog delivered directly to your email by visiting the website or by texting the word “BOWTIE” to 22828.
Recognize need to be part of only statewide group focusing solely on family businesses
Five more companies have recently joined the Family Business Association of California, the only statewide organization that solely focuses on the impacts of new laws and regulations on family businesses.
Joining the Association during the first quarter of the year were Pini Hardware, a 100-year-old retailer based in Novato; Shubert’s Ice Cream and Candy, a Chico-based store marking its 80th anniversary this year; Peter Boysen Realty of Linden, established in 1979; Rediger Labor Law, a Sacramento firm founded in 1999; and Hemphill Solutions, a Carlsbad-based commercial real estate consulting and engagement firm established in 2001.
Pini Hardware: The company was established as a small grocery in 1918 by Swiss immigrant Henry Pini. The Young family became the third family to own Pini’s when they purchased what was by then a hardware store in 1968. The second- and third-generation of Youngs now own and manage the business. Russ Young, the CFO and treasurer, said like most family businesses, the company is deeply involved in Novato.
“We are a community-based business and are heavily involved in local events and give back to our community and schools. Some of the events we do are a Christmas Tree lighting, Scream on the Green on Halloween, and School Fuel, a fundraiser for public schools. And we pride ourselves on being one of the last full-service hardware stores around,” he said.
“Family businesses, big or small, are the cornerstone of this nation. We are what keep the economy strong and growing, and family businesses have been mistreated and misunderstood by today’s society and our local, state, and federal government for far too long. It is time for a change, which is one of the reasons that we joined the FBA to see how we can help make that change.”
Shubert’s Ice Cream & Candy: Leonard C. Shubert left Montana in 1938 at the age of 54 to find a location in California for an ice cream store. Highway 99 led him to Chico and he decided it was the right place. The company has been in the same location since it opened and even still uses one of Leonard Shubert’s original ice cream-making machines. In 2008, as the store was marking its 70th anniversary, it was named one of the two best ice cream stores in the country by ABC’s Good Morning America.
Kasey Reynolds and her brother, Nathan Pulliam, are the fourth-generation owners of the store. Like many sons and daughters of a family business owner, Reynolds at first wasn’t interested in staying at home. “I did go off and do corporate America for a while and it made me appreciate what we have in a family business,” she said.
She joined FBA because she believes small businesses need a bigger voice. “I decided I needed to get involved and do what I can to preserve family businesses for the future,” she said. She also announced in January that she will be a candidate for the Chico City Council this year.
Peter Boysen Realty: The Linden-based firm was founded in 1979 and now has 10 agents, including Peter and Rance Boysen, Peter’s son. As is often the case, for many years while growing up Rance wasn’t interested in joining his dad’s company.
“I never wanted to be in real estate. I said ‘never’ many times growing up,” he recalled. But after a few years as a farm manager after graduating from Cal Poly San Luis Obispo in 1997, he reconsidered. “I wanted to be more than just an employee. I wasn’t having fun. My Dad said he could use some help,” and he soon discovered he enjoyed the new career.
He decided to join FBA after hearing the Association’s Chairman, Ken Monroe, owner of Holt of California, talk on a podcast about the challenges facing family businesses. “I got to thinking, you know – we are a small family business. I think it’s important to do what can be done to help family businesses succeed. Family businesses should be helped in whatever way possible.”
Rediger Labor Law: Attorney Robert Rediger had been a successful labor and employment law attorney for nearly 20 years when he decided to start his own firm in 1999 – and he has since inspired a second generation of family members to join the firm. The firm focuses on traditional labor law, employment law, and related litigation, including defending companies against wage- and-hour class-action lawsuits.
He said daughters Candice and Arielle and son Justin decided on their own to join the firm after graduating from UC Berkeley and from three different law schools. “They said, ‘you’re always excited about your profession and enjoy your job.’ They studied a variety of different areas in law school, but found they enjoyed labor and employment law. When they graduated, I said ‘our firm could use some excellent attorneys,’” he recalled.
Advantages a family firm have include being able to trust people you’re working with and the opportunity to discuss ideas and brainstorm legal strategies with each other outside of the workplace. “Family businesses are also more solid and stable,” he added. “They’re often more conscientious because they have the family’s reputation on the line.”
Hemphill Solutions: The firm was established in 2001 and advises independent businesses on the real estate component of their enterprises, helping clients develop real estate solutions that save costs, reduce liabilities, and maximize operational flexibility.
Ralph Hemphill has more than 30 years’ experience in real estate and private equity and is the firm’s senior advisor while his wife, Katherine, is the broker/manager. He said they joined FBA to share expertise with other family business owners about issues they face.
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About the Family Business Association of California (FBA): Founded in 2012, the Family Business Association of California is the only organization working exclusively at the Capitol to educate lawmakers and regulators about the importance of family businesses to the state’s economy and to their communities – and to advocate positions on legislation and regulations. For more information, visit www.myfba.org.
When Jim Dobbas incorporated his business, he figured doing so on April 1, 1968, was fitting.
“It was April Fool’s Day, but I didn’t care because I didn’t think I was going to make it anyway,” he recalled with a chuckle. Fortunately for California’s railroads, his pessimism was ill-founded.
From a single truck hired out to haul heavy loads, Jim Dobbas Inc. has grown to be a premier heavy equipment contractor, specializing in emergency and derailment response service for class 1 railroads such as the Union Pacific and Burlington Northern Santa Fe. From its yard in Newcastle, northeast of Sacramento, the company now serves Northern California, northern Nevada and southern Oregon.
Three generations of the Dobbas family - from left, Jim, Dillon, and Don.
Don Dobbas, the second-generation president, said railroad-related work makes up about 80 percent of the company’s business, with the rest outside transportation and heavy equipment hauling. A crew of about 40 employees man the fleet of excavators, loaders, dozers, trucks and trailers, and other heavy equipment.
That’s a far cry from the beginning. The family emigrated to the region in 1855 and owned dairies, but Jim was fascinated with trucks since he was a young boy. While still a student at Placer High School in Auburn, Jim bought a 1932 Ford school bus hoping to get it running in auto shop. When that didn’t work out, he bought a running 1931 Chevy truck and then after graduating bought a new Chevy two-ton truck.
Before starting his own company, he was a dispatcher for another company and finally decided to go out on his own.
“Then, I had one truck and no employees, and I didn’t want any. I was going to run that truck until I died,” he said. But a former coworker had other ideas. He kept pestering Jim for a job and finally Jim bought an old truck with no motor for $500 and the new employee soon got it running. That driver started in 1969 and stayed with Dobbas until he retired – and still drops by from time to time to see how things are going.
The company got its big break in 1973, when a train containing 21 freight cars, each carrying 330 bombs and bound for Vietnam, exploded in the massive Roseville rail yard, then owned by the Southern Pacific Railroad. Hot brakes caused by the descent from the Sierra had caused some of the cars’ wooden floors to catch fire.
Jim, now 87, was at home in Auburn when he heard the bombs going off at about 7 a.m. He learned what was happening from a Fire Department radio in his pickup and called SP’s division engineer, who told him to get all the heavy equipment he could and head for Roseville.
His crews stacked the twisted debris and broken tracks in a side area and helped the railroad install new track. “We cleaned up the yard and they were running trains in seven days,” he said.
Jim and Don, who took over as president in 1990 and assumed ownership in 2000, attributed the company’s success and longevity to excellent employees and sheer tenacity.
“It was just going at it every day, answering the phone and saying yes,” Don said. “Working for the railroad you don’t know what that call is going to be. It’s not like bidding a contracting job. Sometimes you’re working seven days straight in bad weather. It takes special people to do it.”
Jim Dobbas crews lifting a tank car.
The jobs often entail bringing the heavy equipment in on rail as close as possible, pulling up the cars, and lifting them back onto good sections of track – one car at a time. The worst derailment they had to deal with was 94 loaded cars in Cajon Pass north of San Bernardino.
Like many second-generation family business owners, Don got his start by going along with his dad on jobs when he was 7 and 8 years old. He worked during summers while in high school and then started full-time as a laborer, equipment operator, and driver after graduating from high school in 1979.
“I never really had the urge to do something different,” Don said. “I was comfortable with it and it was fun – there was no way I was going to be in an office job back then.”
His son, Dillon, is now working as an equipment operator but like many next-gen family members, isn’t sure yet if he wants to make the company his career.
Like many California business owners, the Dobbases say doing business here is always a challenge. The state’s strict environmental regulators – the California Air Resources Board and the Water Quality Control Board in particular – can be difficult to work with.
“The scariest thing is the environmental movement. The smallest mistake – a broken hydraulic line that leaks oil into a river – could cost us the entire company,” Jim said.
Don said family businesses have unique interests unlike other companies, especially inheritance taxes. And, of course, finding family members interested in working for the business and eventually taking over. That’s where FBA has been very helpful, he said.
“Family businesses are different. They have different challenges than a big (public) corporation. For us to have a voice at the Capitol is very important and FBA is there to keep an eye on all the legislation that add more burdens to business,” he said. “That’s invaluable.”
For another perspective, read the article about the Dobbas family business in the Auburn Journal.
When the Congressional Budget Office made its June 2017 forecast of our fiscal future, it projected a deficit of $689 billion in FY2019. The deficit is now poised to be $1.2 trillion, a dramatic and profound change that is hard to overstate. One major reason for the growing deficit is that the GOP tax cut that passed in late December is estimated to reduce revenue by $1 trillion over the next decade, even after pro-growth economic effects are factored in. The other reason is the budget deal passed by Congress in early February, includes $300 billion in new spending over two years, along with $90 billion in hurricane relief, fully financed by larger deficits.
This is a stark reversal from the years 2010 through 2016, when congressional Republicans insisted on spending cuts and the Obama administration insisted on raising taxes (by allowing some of the Bush administration tax cuts to expire). Those steps, combined with an improving economy, cut the budget deficit from almost 10% of GDP in 2009 to less than 2.5% in 2015. What does this abrupt fiscal change mean for the economy in the near term, medium-term and long-term?
In the near term, economic growth should be quite strong. No matter what assumptions are made, and which economic models are used, GDP growth over the next 18 to 24 months will be about half a percentage point higher than it would be absent these twin expansionary policies. After all, between tax cuts and the boost to spending, close to $500 billion is being injected into the US economy over the next year! Even in an economy near full employment, this will boost growth and reduce the likelihood of a recession to a minimum.
In the medium-term, things are a bit murkier. The big question is whether the economy has room to grow without generating inflation — and how the Fed will respond. With unemployment near 20-year lows, it is unknown how close the economy is to full employment. If it is close, inflation is likely to worsen. But if the U.S. has more growth potential, due to more corporate investment in plant and equipment, reduced regulation, and more workers coming from the ranks of those that dropped out in years past, the Fed could raise rates more slowly, allowing the expansion to run longer because inflation would be subdued. In addition, there is also fear that the Powell Fed will proactively raise rates too fast simply to prove its inflation-fighting-chops and needlessly cut short the current expansion.
In the long-run, the annual deficit is going to be worse than at any time other than during recessions or wars. This not only reduces the ability of the government to fight the next recession with a big dose of fiscal stimulus, but higher debt service costs are also a concern. And as interest rates rise because of the added borrowing, so too will interest payments. Lastly, there is also concern that government borrowing may “crowd-out” private sector borrowing. To the extent funds that can be borrowed are finite, and that is debatable, every dollar the government borrows is a dollar potentially not available for home mortgages or business expansion.
To conclude, in the short run, things look good. In the medium-term, the fear of inflation and the Fed’s ability to let the data speak and not preemptively raise rates unnecessarily will determine how long the current expansion lasts. In the long run, the government will have less room to maneuver when the next recession hits, and interest payments will consume a growing percentage of the budget, making budget battles on Capitol Hill more contentious and the need to find more revenue increasingly pressing.
Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70-word economics and policy blog can be seen at www.econ70.com.
The Family Business Association of California is one of the business groups that signed on to the following letter to Assembly Members Phil Ting, D-San Francisco, and Kevin McCarty, D-Sacramento, opposing their proposal to impose a 10 percent “surcharge” on corporate taxes. The effort is being led by the California Taxpayers Association (CalTax.) You can also view and download a fact sheet opposing the measure here.
CalTax and the organizations listed in this letter oppose ACA 22, one of the largest tax increases in state history. ACA 22 imposes a 10 percent “surcharge,” in addition to the existing state corporate tax rate of 8.84 percent, on California employers. Companies with annual net income of more than $1 million that are subject to corporate income and franchise taxes in California would be required to pay the new tax. We oppose this policy for the following reasons:
Creates the Highest Corporate Tax in the U.S. ACA 22 would more than double the state’s corporate tax rate, which already is the highest among the Western states, and one of the highest in the nation. This would represent one of the largest tax increases on California employers in the state’s history. The 18.84 percent corporate tax rate proposed by this measure would be the highest corporate tax rate in the United States, by a wide margin, and would create a huge incentive for California businesses to take their jobs and operations to other states. Texas, Nevada and Washington, for example, have no corporate income tax, and even New York’s 6.5 percent corporate tax would be roughly two-thirds less burdensome than California’s tax.
Creates a Competitive Disadvantage for Employers Who Stay in California. Higher corporate tax rates put California companies at a tremendous competitive disadvantage. The 49 other states all would benefit from California’s decision to make itself less attractive to employers. A thriving economy is the best source of growing revenue for important government programs, but by chasing jobs away, this proposal would hurt rather than help.
A 2017 study by the Washington, D.C.-based Tax Foundation found that the corporate tax falls predominately on labor, which it estimates bears at least 70 percent, if not all, of the burden. At some point, a tax increase on business impacts individuals through less economic growth, lower wages, higher prices, fewer jobs or decreased returns in retirement accounts.
California already has sufficient revenue to provide additional funding for programs that benefit the Middle Class. The Legislative Analyst’s Office stated in its review of the governor’s proposed 2018-19 budget: “Under our current revenue and spending estimates, and assuming the Legislature makes no additional budget commitments, the state would end the 2018-19 fiscal year with $19.3 billion in total reserves (including $7.5 billion in discretionary reserves).” The analyst added that revenue is expected to be even higher when the
budget is revised in May, and noted that these estimates do not account for possible economic stimulus from federal tax changes. When the state is bringing in surplus revenue, it simply is unnecessary to impose one of the largest tax increases in California history, targeted directly at companies that employ California workers and fuel the state’s economy.
For the foregoing reasons, we must oppose this legislation.
California Taxpayers Association
Advanced Medical Technology Association (AdvaMed)
Association of California Life & Health Insurance Companies
Biocom
California Ambulance Association
California Apartment Association
California Beer & Beverage Distributors
California Business Properties Association
California Forestry Association
California Hotel & Lodging Association
California Life Sciences Association
California Manufacturers & Technology Association
California Railroads
California Restaurant Association
California Retailers Association
CompTIA
Council on State Taxation
Family Business Association of California
Los Angeles Official Police Garages
Orange County Taxpayers Association
San Diego County Apartment Association
Silicon Valley Leadership Group
Western Growers Association
Western Manufactured Housing Communities Association
Wine Institute
