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Unions Using Obamacare to Punish Small Business

Posted By James Sherk On January 6, 2010 @ 10:43 am In Obamacare | Comments Disabled

When does Washington consider a successful small business a problem to be dealt with? When that small business successfully competes against unionized firms. Then it needs to be tied down with expensive red tape until it is no longer so successful.

Say what? Members of Congress routinely extol the praises of small businesses as the engine of job creation – especially in these difficult economic times. This is standard practice on Capitol Hill – small businesses do not have the same resources as large ones, and they often cannot afford to comply with federal mandates. Rather than put them out of business Congress exempts them from expensive regulations.

The Senate health care bill also gives small businesses an out. The bill fines businesses $750 for each employee if the company does not provide more expensive “qualifying” health coverage to all their workers. However, companies with less than 50 workers do not have to pay this fine.

Or at least, that was how the bill was written. A small provision slipped into the bill at the last minute changes that threshold for the construction industry. Now any construction company with five or more workers would have to pay the fine. With a few paragraphs in a 2,074 page bill the Senate gutted the small business exemption for construction companies.

Construction workers have born the brunt of the recession with the collapse of the housing bubble, accounting for 1.5 of the 7 million jobs lost since December 2007. Now the health care bill forces a heavy regulatory burden on small construction business.

Why would the Senate kick small construction contractors when they are down?

Special interests, why else? Construction unions hate the competition from small, mostly nonunion contractors.

The health care bill will make providing “qualifying” healthcare coverage significantly more expensive. It forbids lifetime limits on coverage and requires insurers to cover children on their parent’s plans until they are 25. Unions estimate these provisions will raise the cost of health coverage by an additional $1,000 a year. [1]

They do not want the law to allow small businesses to provide less generous health benefits and then underbid them for construction jobs. They want small business to work with the same expensive regulations and taxes they do.

Of course, these regulations and taxes burden small businesses more heavily because they have less money to pay for them. Instead of getting more generous benefits many workers at small construction companies will lose both their jobs and their health benefits.

That that fact did not stop the union movement should not surprise anyone. Unions are cartels [2] – they attempt to raise their members’ earnings by restricting competition. Unions can only win above-market wages when they can prevent nonunion workers from competing against them for jobs. By using the law to shackle their small business competitors the union movement can prevent them from winning bids for projects. That is great for unions – but not for the small business employees.

Normally Congress would stand up for small business employees. But the labor movement is no ordinary special interest. Unions spent hundreds of millions of dollars to elect Obama and the current liberal Congress. So when construction unions asked the Senate to kneecap their small competitors, Majority Leader Reid was happy to comply.


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URL to article: http://blog.heritage.org/2010/01/06/unions-using-obamacare-to-punish-small-business/

URLs in this post:

[1] Unions estimate these provisions will raise the cost of health coverage by an additional $1,000 a year.: http://www.nytimes.com/2010/01/04/health/policy/04health.html

[2] Unions are cartels: http://www.heritage.org/Research/Labor/bg2775.cfm

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