Building a stronger economy by supporting small business
As Americans prepare to visit the polls this November, voters are once again being asked to decide if their elected officials have taken the right steps to improve the economy and grow jobs. On Main Street, small business owners are taking a closer look at what has been done to address regulatory barriers, reduce the growing cost of healthcare and open up the marketplace so companies can once again contribute to a prosperous economy in the months and years ahead.
In the construction industry specifically, success is closely tied to a growing economy and robust jobs market because when the economy is weak, plans for building and expansion are often the first to be cut. Fortunately, low interest rates and a rebounding stock market are lowering borrowing costs and creating wealth, both of which are contributing to the potential for a strong recovery for the commercial construction industry moving forward. While this is certainly encouraging news, recent changes to small business health insurance plans present an entirely new set of costs which must now be factored into operating budgets, making it increasingly difficult to plan for the future.
Take for example, rising healthcare premiums. New data recently released from McKinsey suggests that the average median premium could increase by 7 percent nationally. However, in some states such as Kansas, Iowa, Tennessee, Virginia and Vermont, a study by PricewaterhouseCoopers found that premiums could increase by as much as 10 to 15 percent. And on a county level, the changes are even more troubling as Forbes recently illustrated how premiums are increasing upwards of 200 percent in counties in Missouri and Minnesota, a staggering and surely unsustainable upsurge.
Unsurprisingly, several Federal Reserve Banks are finding that all of this uncertainty around rising premiums is forcing businesses to make drastic changes to their future plans. In Dallas, a survey of businesses found the ACA has led a quarter of respondents to fire employees and 16.5 percent say they have more part-time workers than full-time due to coverage expenses. It’s a similar story in Philadelphia where 18.2 percent of businesses are cutting jobs in response to the law.
The strain this will cause the national economy is particularly poignant for the construction industry, which relies on new and expanding businesses for a steady supply of work. And it isn’t just businesses in the states with the highest premium increases that will have to adjust employee benefits or plans for expansion. A new tax on small businesses, called the health insurance tax, or HIT, is contributing to a rise in premiums for a majority of small business owners and their workers across the country.
A product of the ACA, the HIT is being applied to insurance policies in the fully-insured marketplace, where nearly 90 percent of small businesses purchase their insurance. Though initially taxing insurance companies directly, the HIT is already being passed on to small businesses in the form of higher premiums, which are expected to cost American families $500 more a year.
As this tax stifles the growth of small business, the ripple effect on the economy will be felt far and wide. According to the National Federation of Independent Business Research Foundation, as many as 239,000 jobs will be lost by 2023 as a result of the HIT and real GDP is forecasted to be as much as $33 billion less than it would be without the added tax.
In the end, the numbers speak for themselves. Unless ongoing barriers to growth like the HIT are addressed, the impact on America’s businesses will negate the critical progress our fragile economy has made in recent years and puts thousands of jobs into jeopardy. Fortunately, the solution is simple. Bipartisan support for providing small businesses relief from this tax already exists within Congress, including recent legislation to (at the very least) provide a two year delay. Now is the time for all members of Congress to support this small business relief effort and stand in solidarity with the hard-working men and women who are building our economy, one community at a time.
Bellaman is president and CEO of Associated Builders and Contractors (ABC), a national construction industry trade association