Hot Politics: 5 Election-Year Issues With Retail Ramifications

With their national conventions just a month away, Republicans and Democrats will soon finalize their nominees for the 2016 presidential election. Over the past six months, through dozens of nationally televised debates, town halls, and endless stump speeches, the slowly narrowing field of candidates has honed the issues facing the nation to those of greatest apparent concern to the electorate. Independent jewelers across the country spoke to JCK about what they deem to be the five most important, explaining their direct relevance to the trade and the potential effect on retail jewelers. 

Free Trade vs. Fair Trade

Few industries are more globally interwoven than fine jewelry. Independent jewelers in the United States source luxury watches from Switzerland and Japan; pearls from the Far East and South Pacific; diamonds from Israel, India, and Belgium; and colored stones from just about everywhere. But America also has a long tradition of jewelry manufacturing, a base that has been eroding significantly as production has moved to cheaper labor centers such as China and India.

“Jewelry is not a big industry like car manufacturing,” says John Kerkinni, owner of Princess Jewelry in Burnsville, Minn., and WeddingBands.com. “But it’s suffering from the same problem. Manufacturing is hurting.”

Beyond the labor cost advantages enjoyed by offshore factories, the tariffs and duties for importing and exporting finished jewelry and components often favor trade partners.

Free trade “brings us better competition, which means lower prices and better quality,” Kerkinni says. “That’s good for everyone, the public and business. And we can compete with anybody. But if it’s going to be free trade, let it actually be free trade. When there’s protection on one side, it’s unfair.”

Two problems stemming from increased reliance on foreign manufacturing are extended shipping windows and diminished quality control, Kerkinni adds. Order delivery often takes up to four times as long from overseas manufacturers as from domestic sources. And recent issues such as synthetic diamonds being passed off as natural stones in melee parcels have become increasingly prevalent.

Politically driven trade sanctions are also of concern to jewelers. On the heels of President Barack Obama’s recent visit to Cuba, hopes are rising for similarly warming relations with Myanmar/Burma. 

“I would like to see them lift the ban on jade and rubies,” says Mona Nesseth, owner of Mona Lee Nesseth Estate and Custom Jewelry in Laguna Beach, Calif. “The small Burmese miners aren’t the ones we should be punishing. Preventing those stones from coming into the U.S. isn’t going to affect human rights there. I used to do a lot of Burmese rubies. But it’s gotten to be prohibitive.” 
 

Affordable Health Care

As a cornerstone of President Obama’s legacy, health care reform has been front and center in the platforms of all the candidates. Inclusiveness of coverage and spiraling costs make it a leading issue for the majority of individuals and businesses, jewelry included. Like many Americans, jewelers are worried about continually rising premiums and deductibles.

Michael Fleck, owner of Occasions Fine Jewelry in Midland, Texas, provides health insurance to his employees as a standard benefit and says he’s been forced to shop and switch out providers annually in his efforts to contain costs. “Every year,” he says, “my insurance broker comes in, scratches his head, and says, ‘Looks like it’s going up for you.’?”   

Fleck currently has 15 employees on his plan. Since the introduction of the Affordable Care Act, several employees have opted out and chosen instead to insure themselves directly through the Health Insurance Marketplace. But costs are rising there, too.

“I’d like to see the whole health care thing figured out,” Fleck says. “It needs to be more affordable.”

Jewelers are also experiencing increases in their personal insurance rates. In Asheville, N.C., Tonya Marthaler, co-owner of Marthaler Jewelers, says the monthly premium for covering herself and her husband has gone from $300 to $900 over the past several years. And that’s with a $16,000 deductible. “That’s just me personally,” she says. 

Jewelry customers are another group feeling the squeeze. According to Nesseth, large employers in her market have transitioned from direct employment to independent contractor personnel models or are moving employees to part-time to avoid footing the bill. “That affects not only the entry-level jewelry consumer, but also the psychology of the business leaders,” she says. “They’re as grumpy as can be.”
 

Immigration Reform

From Donald Trump’s plan to build a “big and beautiful” wall along the Mexican-U.S. border to agreeing upon and devising a path to naturalization for undocumented immigrants, immigration issues have been top of mind for all the 2016 presidential hopefuls. While at first blush this wouldn’t seem highly relevant to the trade, some jewelers emphasize aspects such as personal security and confidence levels in the exchange of goods and services.

Mark Mazzarese, owner of Mazzarese Jewelers in Leawood, Kan., stresses the need to improve screening and background checks within the immigration process to safeguard jewelers and suppliers from organized jewelry crime. 

“Immigration is absolutely an issue for us,” he says. “I had a traveling salesman who had been hit so many times by Colombians that he was uninsurable.”

Beyond safety, this type of crime has an economic effect. Vendors, Mazzarese explains, ultimately must add the cost of such losses into their pricing. A reduction in organized jewelry crime would save everyone money.

Also at issue for jewelers is the potential for decreasing credit risk, at all levels of the industry, by improving the immigration system. 

“There are a lot of foreign participants in our industry, and our industry often deals on handshakes,” Mazzarese says. “There’s a lot of insecurity about extending credit to somebody who might not be here tomorrow. If you’re going to let people in the country so willy-nilly, they can leave just as easily and your goods can disappear.”

Kerkinni adds that while he has personally benefited from America’s liberal immigration policies—he emigrated from Turkey in 1980—he underwent a lengthy process to adhere to existing laws and enter the country legally. The system needs to be strong enough, he says, to ensure that anyone wishing to come and live in America is subject to the same rigorous vetting.
 

Gun Violence and Control

The escalation in mass shootings and increased concerns over domestic terrorism have intensified focus on issues related to gun violence and ownership. Jewelers, a prime target for armed robbery, have a significant stake in the debate. 

As of Jan. 1, for example, Texas residents have been legally permitted to carry handguns in plain sight for the first time since 1871. According to Fleck, the state of Texas, historically one of America’s leading pro–Second Amendment states, passed the open-carry legislation in oppositional response to the growing national movement toward increased gun control. 

“Now we’re wondering as jewelers how to handle it,” Fleck explains. “Before, if I had seen somebody with a gun in their hands coming through the front door, my first thought would have been to pull the silent alarm. Now I don’t know.”

Occasions Fine Jewelry has a lengthy tradition of engraving firearms. So it’s not unusual for customers to bring guns into the store. Most break their guns down, bringing in just the pieces they wish to have engraved, Fleck says.

But with the change in the law, he’s left with two less-than-perfect choices. He can either allow shoppers to carry guns in the store, increasing his security risk, or place a sign on his front door stating that guns are not permitted, which he worries would be aesthetically displeasing and might upset pro-carry clients.

Mazzarese, whose state of Kansas also allows open carry, has chosen the latter option. “I’m pro-gun,” he explains. “But jewelry is not normal retail. And that’s why we need to ask people not to bring them into the store. Unfortunately, when you take that stand, you have to worry about whom you might offend.”
 

Big Government and Gridlock

Overregulation and taxation are long-standing bugbears of business. Candidate rhetoric calling for increasing taxes on the wealthy presents a significant concern for jewelers, who rely on affluent consumers and discretionary spending for a large percentage of their revenues.

“The election is problematic for my business because many of my clients are uncertain how the elected regime will legislate taxes,” Nesseth says. 

According to Mazzarese, these worries are taking their greatest toll on the American middle class. “With this election, the biggest thing is how people feel,” he says. “Primarily it’s about the middle class and how they’re affected.”

Others blame the recent gridlock between the Obama administration and Congress for depressing the jewelry market. Larry Sanders, president and CEO of Sanders Diamond Jewelers, Pasadena, Md., says a stalemate between the two branches on budgeting for defense spending has left engineers and other highly compensated consumers in his market with diminished spending power.

“When the government runs out of money, people here lose their jobs,” he says. “People are too afraid to spend.”

Jewelers are also concerned with business tax issues. Fleck calls for a simplified tax code that would level the playing field for independent jewelers vis-à-vis their large corporate competitors. 

“It’s the 1 percent of the 1 percent that really have the ability to hide their money. Small businesses can’t do that,” he says. “Whenever a tax is raised on business owners, small businesses are the ones going to get stuck with it.”  

Agrees Sanders: “If the backbone of America is small business, why are we treated like third-class citizens? Something has to be fixed.”