Harming Employers

Posted on September 09, 2009

The editorial “Health reform: What the House bill is really about” (Our View, Aug. 30) accurately notes that many small businesses oppose an employer mandate, but it does not specify how such legislation would hurt these enterprises.
Policymakers who want employers to provide health care for employees should recognize that the traditional definitions of “small” versus “large” companies aren’t always appropriate.

Many small employers have a very high profit per employee. For example, investment firms generate tens of thousands of dollars in pure profit for a single hire. On the other hand, some large companies employ thousands of workers in entry-wage positions. They operate on low levels of profit per each employee. A “play-or-pay” mandate based on number of employees disproportionately impacts these businesses.

A $400 per year per employee health care premium would be less than 2 percent of the profit of a small investment firm but it would be a devastating 20 percent of profits for a casual dining restaurant.

Kristen Lopez Eastlick Senior economic analyst Employment Policies Institute
Washington, D.C.