Small Businesses Screwed By Dem Health Care Plan & The Poor & Middle Class Will Suffer

by Melissa Clouthier | July 17, 2009 11:56 am

Head count. Reducing head count is the quick and dirty way for companies to cut costs because employee salaries make up the biggest percentage of overhead in most businesses. So, when other costs go way up, when the economy is too weak to support raising prices, what’s a businessperson to do? He must, to stay in business, reduce head count.

Usually, the employees lost are not the guys creating new products or the guys selling the products (if they sell well). Usually, the first employees to go are the support staff, the less productive, the less value-added. They are usually pay less well. That is, while the necessary decision-makers might take pay cuts, the support staff just get cut. The head guys can get their own coffee and read their own email and fax their own contracts, if they must.

And so, during the worst economy since Jimmy Carter and Disco, the Democrats introduce a Health Care Plan that will force small business owners to make very difficult decisions. If they want to stay in business during this oppressive economic environment, while being compliant with this new bill, they’ll have to lose employees. They will agonize over these choices because small businesses are like families. They know one another. They know the struggles. They’ve slipped a suffering employee something extra to make it. They’ve not paid themselves so that no one gets fired.

But everyone’s hand gets forced sometimes and the government is going to be forcing some hands. Jimmie Bise, once again, has a must-read American Issues Project post[1]. He gives an example:

Let’s up the ante a little bit. Company B consists of an owner, who also doubles as general manager (and pays herself a rather modest $80,000 per year), and ten part-time employees who each make $35,000, for a payroll of $430,000. That’s large enough to trigger the full 8 percent penalty, which comes to $34,400. Well, that’s just about one employee’s salary, so out he goes, which not only covers the fine but also brings Company B under the $400,000 threshold, which means a potential smaller fine next year. Bonus!

Company B could easily be a car dealership, a local insurance office, a mid-sized construction company or contractor, or a retail store where the salespeople work at least partly on commission. This could be the final straw that convinces the owner to say “To hell with it.”

This isn’t just a thought exercise, though. There’s an action component as well. Look at the businesses you patronize regularly or even just the ones you drive past on the way to work. Look at your own employer, or the businesses where your friends and family work. How many of them will face the choice of firing someone to pay for the Obamacare fine or to limbo their payroll under the Democrats’ bar? Will that perpetually-cheerful cashier at the local convenience sore still be there this time next year if Obamacare passes? How about that electrician with the young wife and baby who always does great work and let you slide on a service call that one time? Shouldn’t they know what could be coming their way?

Most of the Democrats, though, are clueless about how business actually works. More importantly, they don’t care. With their focus on redistribution, what they don’t realize is that small businesses can MAKE themselves smaller, still survive, to stay compliant with egregious government rules or pay fines that cost them less than the rule.

Hopefully, all this won’t matter. Hopefully, for once, Congress will listen to the people, who are now resoundingly against Obama’s plan[2].