Tags: small | business | healthcare | costs

A Really Different Small Business Day for 2013

Thursday, 29 Nov 2012 07:55 AM Current | Bio | Archive

Saturday, Nov. 24 was Small Business Day. Nestled between Black Friday and Cyber Monday, Small Business Day is a time to encourage consumers to buy from small retailers. President Barack Obama made a big deal about buying some books at a small bookstore.

The irony is that while he was giving himself a public relations boost, his tax hikes and Obamacare were shoving many of these small businesses into insolvency. As this trend continues, next year there will be far fewer small businesses and employees left to celebrate Small Business Day.

It should come as no surprise that more than 95 percent of all retailers have only one store outlet, and that over 90 percent of retail companies register sales of less than $5 million. Then mix in the fact that more than 98 percent of all retail companies employ fewer than 100 workers, and you have companies extremely vulnerable to added expenses like higher taxes and rising health insurance costs.

As a reminder, Obamacare mandates that any employer with 50 full-time employees or more must provide qualified health insurance coverage. Failure to do so results in a $2,000 per employee fine for any employee without coverage. Employers with fewer than 50 full-time employees are not held to this mandate. It all takes effect in 2014.

This gives weight to a 2011 Gallup poll that found that small business owners in the United States are most likely to say complying with government regulations is the most important problem facing them today.

I wrote previously of the impact these policies have in the food service business, where companies like Papa Johns and Denny’s are moving employees from full-time to part-time status and even adding a surcharge to customer bills to pay for Obamacare.

According to a report by the Employee Benefit Research Institute, the percentage of workers moving into part-time status grew from 17 percent in 2007 to 22 percent in 2011. Only 28 percent of companies that offer health benefits make them available to part-time employees, according to The Henry J. Kaiser Family Foundation.

Yet, this is only the tip of the iceberg for the 25 million unemployed and underemployed Americans. Stephen Fuller, director of the Center for Regional Analysis at George Mason University, predicted that small business workers will suffer more than 50 percent of the projected 2.14 million job losses due to spending cuts brought on by increased government regulations such as Obamacare.

The Kaiser Foundation estimated that as costs to provide health coverage have exploded by more than 70 percent over the last five years, small businesses have not been able to keep pace with those increases.

“These trends have very severe implications for the level of the uninsured and the stability of employer-based health insurance in the United States,” the foundations said.

According to the Small Business Administration, “Access to health insurance coverage among employees of small businesses is one of the most intractable problems facing the U.S. healthcare system. Small businesses face a variety of barriers to offering health insurance coverage to their employees. The costs of health insurance are typically much higher for employees of small businesses. In addition, small businesses face significantly higher administrative costs per employee to offer health insurance and their overall costs are less predictable than the costs of large businesses. Employees of small businesses tend to receive lower wages compared to employees of large businesses, making low-wage employees less likely to prefer health insurance benefits to higher wages.”

One of the real tragedies of converting more employees to part-time positions is they will be unable to receive the job experience that allows them to step up to higher-paying, more stable full-time jobs.

Perhaps the most frightening part of Obamacare, is that while the United States is trying to halt the export of jobs and encouraging U.S. companies with businesses overseas to come back home, companies like Boston Scientific, trying to avoid runaway benefit costs, are thinking of moving more jobs overseas.

There will be another wave of U.S. companies leaving American shores, just when there was some evidence that many manufacturing jobs would be brought back home. We are seeing this trend turn into a tragedy.

This is the ultimate effect of Obamacare: killing U.S. jobs and moving more jobs overseas to avoid its costs. Anyone who sat on their hands this election and didn’t vote to change direction is waking up to the reality that the future of job creation in this country is in great peril.

And for the nation’s small retailers, let me wish you all an early Happy Small Business Day — in the event Obamacare and taxes force you to close your doors.

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Saturday, Nov. 24 was Small Business Day. Nestled between Black Friday and Cyber Monday, Small Business Day is a time to encourage consumers to buy from small retailers.
Thursday, 29 Nov 2012 07:55 AM
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