Mandates Hurt Small Businesses

Posted on September 18, 2009

A recent Valley Views column (“Health-care bill would burden businesses,” Sept. 8) accurately notes many of the concerns that businesses have with the increasing number of employer mandates. Policymakers who favor a requirement that employers provide health care for employees should also recognize the traditional definitions of “small business” vs. “large company” 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 affects 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 a devastating 20 percent of profits for a casual dining restaurant.

Kristen Lopez Eastlick
Senior Economic Analyst
Employment Policies Institute
Washington, D.C.