Truths about America and small business

Truths about America and small business

It is time to get over the myths and legends of America's "small business character."

WASHINGTON, June 6, 2015  – There is a mythology about businesses in America. We see that the vast majority of the companies in this country are small (50 or fewer employees) and conclude they are a unique part of the nation’s character. We are told that small businesses are right up there with apple pie, hot dogs, baseball and other iconic U.S. institutions.

The vast majority of jobs in the U.S. are created by small businesses (roughly 80 percent). But the reality is those companies could create many more employment opportunities but for the fact that America’s businesses are forced to stay small because of government rules and legislation.

I visited with Judith Sadler, a leading authority on labor law on the Price of Business show. I asked her to give me some examples of how the government keeps enterprises small.

She gave me quite a list:

For companies with 11 or more employees, OSHA requires summary forms from all employers.

When there are 50 or more employees (with federal contracts involved) and for all businesses over 100, Affirmative Action programs require “contractors and subcontractors to create and implement annual Affirmative Action Plans (AAPs). The AAPs provide statistical analysis of the employer’s “underutilization” of individuals from certain protected classes and include the steps that will be taken to improve their representation in the employer’s workforce.

Separate AAPs must be created for women and minorities, Vietnam era and disabled veterans, and disabled individuals. The plans must be written each year, although they do not have to be filed with the Office of Federal Contract Compliance Programs until an audit is conducted.”

One of the most noted laws of this type − the Family and Medical Leave Act − is devastating to those with 50 or more employees, as this act “establishes a policy of 12 weeks of unpaid leave (and in some instances more than 12 weeks) when an employee is covered by provisions of the Act.”

The Health Maintenance Organization Act takes aim at companies with 25 or more employees, requiring “employers with 25 or more employees who are already providing health insurance benefits (contributory or non-contributory) to offer an alternative HMO option to employees, if a qualified HMO is available in the area where at least 25 of the employees live. The Act provides for assessment of a civil penalty of up to $10,000 for each 30-day period in which this option is not provided (but certain exceptions extend the deadline, such as where existing contract is in effect which sets annual enrollment dates, in which case the HMO option must be provided during the next open enrollment period).”

Even companies with as few as 20 employees are exposed to oppressive government regulations such as the Consolidated Omnibus Budget Reconciliation Act (COBRA), which requires “group health plans sponsored by employers in the prior year to offer employees and other covered dependents the opportunity for a temporary extension of health coverage in certain specific instances” and “imposes notification and record keeping requirements on the employer.”

Under Obama life has become even more difficult for small employers, since they have to share part of the financial burden of paying the premiums, if the unemployment was the result of a layoff.

This does not even include the huge impact the Affordable Care Act has on business, driving employers to hire fewer full time workers while hiring as many part-time workers as possible to avoid the requirement to provide them with costly ACA-compliant health insurance coverage.

The list goes on and it gets worse, as the federal government is not the only entity that imposes higher fixed costs for businesses. California, Hawaii, New Jersey, New York, Rhode Island, and Washington are among the many states that have tough tax and employee benefit laws that harm every company with the exception of the very smallest.

The bottom line is that government regulations imposes ruinous and economically damaging limits on the growth of businesses in this country.  It is time to get over the myths and legends of America’s “small business character.” They no longer tell the whole story.

Instead, it is time to unleash small businesses so they can achieve the American Dream and not the dysfunctional one designed by a government that cares only for revenue, forgetting that it is only successful and profitable businesses, large and small, that can generate it, long the jobs such profits create.

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