Obama Administration's Small Business Policies Are Nothing to Cheer About

Katie Gage
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Posted: May 29, 2010 12:01 AM
Obama Administration's Small Business Policies Are Nothing to Cheer About

Despite this week’s celebration of Small Business Week by the federal government recognizing efforts made by employers in creating opportunities for millions of Americans, the Obama Administration’s support for proposals that result in forced unionization could lead to the extinction of these very same businesses.

While President Obama caters to Big Labor’s demands for political paybacks, small businesses are just trying to survive day by day in this extremely challenging economy. The investment by union bosses of hundreds of millions of dollars in getting the President elected has allowed them unprecedented access in government resulting in policies that increase costs and burdens on employers.

Rush Limbaugh

Big Labor is trying to get its number one legislative priority, the Employee ‘Forced’ Choice Act (EFCA) passed since it will boost union membership that has been in decline for years. Plain and simple, EFCA will hurt small businesses by making it easier for labor bosses to forcibly unionize workers. Two of the most harmful provisions in the bill include taking away the right of workers to vote by secret ballot during union-organizing elections, and saddling workers and small businesses with contracts they do not approve of, which determine wages and benefits that are binding for at least two years.

Small businesses across the country will struggle to survive in this kind of environment as extra costs brought on by forced unionization could very well sink them. Many businesses will have no choice but to close their doors or move overseas causing enormous job loss. In fact, if enacted, EFCA would cause the loss of 600,000 jobs in the first year alone.

Increased job loss would create continued economic instability in our country and run counter to every promise both the administration and Congress have made about focusing on job creation and small business development.

In the year and a half President Obama has been in office, he has bent over backwards to meet the demands of Big Labor at the expense of small businesses, one recent example being Executive Order 13502, which encourages the use of project labor agreements (PLAs) on big federal construction projects. These union-favoring agreements effectively end fair and open competition, instead creating situations where it’s too cost-prohibitive for non-union contractors to compete. Under PLAs, non-union shops are discriminated against when it comes to competing for public jobs paid for with their own tax dollars.

This order is so concerning to non-union shops – which comprise the majority of the construction industry – because losing out on project work means employees will lose their jobs and businesses will struggle to stay open. The reality is that it’s too costly for non-union contractors to even compete for these jobs. PLAs require that non-union contractors pay employee benefits twice – once to their employees and once to the unions that oversee the project. In addition, non-union contractors would have to pay into under-funded and mismanaged union pension plans and their employees wouldn’t see the benefits of these plans unless they joined the union.

Paying into these failing plans would very likely expose a company to pension liabilities, potentially prohibiting non-union contractors from qualifying for construction bonds for future projects or even bankrupting them.

Failing union pension plans are at the heart of why the unions want paybacks despite the fact that the liability would be assumed by small businesses. These plans are less than fully-funded and, in particular, the rank-and-file plans are much worse off than the union officer plans. These plans had been failing long before the economic crisis hit largely due to union boss abuse and mismanagement and Big Labor will do anything to bail them out.

The livelihood of small businesses is at stake and yet the Obama Administration wants to cater to the interests of power and money-hungry labor bosses. The federal government can applaud employers’ achievements all it wants during Small Business Week, but the Obama Administration’s policies and favoritism toward Big Labor speak much louder and will cause irreparable harm to the very ones they cheer this week.