PEO Industry Pulse: IRS PEO Certification, Health Care Reform & The Economy

G&A Partners' president & COO talks about the state of the PEO industry

John W. Allen, president and COO of G&A Partners, recently participated in a roundtable discussion hosted by Brown Gibbons Lang & Company with other leading professional employer organizations (PEOs) about the state of the PEO market, the IRS PEO certification process, health care reform and the economy.

Highlights from the conversation:

What impact will the new IRS certification program have on industry penetration?

"I think the common belief is that the IRS certification will in some way legitimize the industry and allow us to increase market penetration, said Allen. "However, the verification in and of itself will do nothing. It will only matter if NAPEO and participating PEOs get the word out. The IRS will do nothing to promote our brand. We have to do that and use the certification as a way to convince a skeptical business world that what we do has real value and the backing of federal and state governments."

If ObamaCare is repealed, what would the impact be on the PEO industry?

"ObamaCare was a big boon to the PEO industry," said Allen. "It forced businesses to think outside the box and look for new solutions. Many found the answers they were looking for in the product and service offerings of PEOs. If the law is repealed in its entirety, some businesses may no longer feel compelled to offer health insurance, and PEOs will lose business. If it is repealed in part or replaced by something else, then the demand for innovative and cost-effective solutions may remain. I believe ObamaCare created an increase in PEO awareness that won’t go away because of changes or the elimination of the legislation."

How much longer do you believe growth in the U.S. economy will continue, and what impact do you think a mild recession would have on the PEO industry?

"Houston went through its own recession about two years ago when the price of oil plummeted," said Allen. "We are not anxious to see the national economy falter, but it inevitably will. That’s just the way it works. The question is when, right? The new administration is certainly pro-business and will do all in their power to light a fire in an economy that has never fully recovered. In my opinion, the economy has been dragging for some time, and the stock market has risen to record heights based on the expectation that at some point the economy would really take off. I’d like to think the economy will have a spurt before the next recession, but I am uncertain and not particularly bullish. That said, we are aggressively growing our business through organic sales and strategic acquisitions, so we are banking on at least a stable economy over the next four years."

This roundtable discussion was originally published as part of Brown Gibbons Lang & Company's August 2017 BGL Business Services Insider report, "PEOs Attract Small Business, Investors."