Hey Obama, Business Doesn’t Work That Way

Governor Abbott agrees with us that an Article V Convention of states is necessary, and the time is now.

Hey Obama, Business Doesn’t Work That Way
By Allen Tharp

By Allen Tharp

When I write my weekly comments for the Revere Report, I often address pending legislation, economic issues, or calls to action. I try to not overly focus on business matters because I realize not everyone is a business owner. However, anything that impacts small business also impacts you, whether you are a business owner or not.

When overly burdensome regulations drive costs up and profits down for small business, then the entire country’s economy is made less healthy because small businesses represent 99.7% of all employer firms, hire about half of all private sector employees, and have generated 64% of all net new jobs over the past 18 years. The entire US economy is tied to the health of small business. That is why Small business used to be referred to as the backbone of America.  Of course, that was back when rugged individualism was praised and entrepreneurs were admired for their contributions to the economy and society.

Despite the government onslaught on America’s small business, entrepreneurship still appeals more to Americans than western Europeans. Amazingly 70% of Americans say they would prefer to be an entrepreneur over working for someone else while only 46% of western Europeans say they prefer to own their own business. It seems that Europeans have had their independence drummed out of them over the years. Perhaps that time is coming soon for Americans, because it is getting harder and harder to keep a business afloat in this sea of government regulations.

Although many Americans may seek the challenge of owning their own enterprise, investing in and running your own business is a risky venture and a huge financial and time commitment. Only about half of all new establishments survive five years or more and about one-third survive 10 years or more. That failure rate goes up considerably if you take franchise businesses out of the mix. Many entrepreneurs fail and lose their life savings trying to keep a business viable when they become overwhelmed by government regulations and the associated intolerable costs.

Owning a business and creating jobs is already a high-risk occupation, so it makes absolutely no sense for the government to make it even more difficult and costly to keep the doors open. However, whether through ignorance, misguided good intentions, or pernicious intent, the government continues their assault on small business, with yet another crushing and costly regulation sure to completely upend the way businesses currently operate.

This week the White House is expected to approve a new DOL regulation that will affect millions of small businesses, driving up their labor costs and creating more layers of red tape.

The Department of Labor’s proposed overtime rule raises the salary threshold for eligible workers from $23,660 to $50,440. That means that employers will now be forced to pay overtime to previously salaried employees earning less than $50,440 who are now eligible for time-and-a-half for every hour they work beyond 40 hours per week.

Neither the White House or the DOL has explained where all this extra money they are promising to put into the pockets of employees is supposed to come from, or from what body part Obama is going to pull that extra money. Regardless, the Obama administration assures us that 5 million more people should get ready for all that extra money they are going to make, as a result of the new Obama overtime rule.

However, business does not work that way. Many businesses can’t afford to pay the extra money. Others will decide that it is just too costly to continue to operate as usual because they would be unable to meet their labor targets.

Businesses that cannot absorb higher costs will not pay higher costs. It is as simple as that. One option for businesses will be to convert some salaried employees into hourly workers. In other words, those workers will be demoted. Many will lose the benefits that come with salaried positions. They will also lose the freedom that comes with not having to punch a clock and will instead have to account for every minute worked.

The other alternative for business owners will be to strictly limit hours for salaried employees. A manager that worked 50 hours for $50,000 will now take a 20% time and pay cut and work 40 hours for $40k.  The employee loses $10k, and the company gets stuck with more paperwork and reporting requirements, which means more time and money small businesses cannot afford to waste.

This will also mean lower productivity. Salaried employees who must now be kept under 40 hours per week to avoid overtime will have to drop what they’re doing regardless of whether the work is finished or not.

Be assured there will be many consequences for businesses and customers that the federal bureaucrats haven’t imagined. Employees will be unhappy. Owners will be hurt financially. Projects will take longer. Orders won’t be filled. Fewer customers served. All of this was pointed out to the DOL by tens of thousands of concerned citizens, but the bureaucrats have ploughed ahead anyway and completely ignored the advice and experience offered to them. With this kind of anti-business policy being foisted on America’s jobs and businesses by Washington D.C., it is no wonder that we are experiencing a 38-year low in the labor participation rate.

At this point with the administration ignoring both the needs of small business and common sense, we must first make Congress aware of this urgent problem and get them to address this through legislation. Secondly, remember the power we have to rein in the Federal government through an Article V Amendments Convention. Reining in the power of the unauthorized fourth branch of the Federal Government is exactly the type of amendment that could pass the requisite 38 states ratification process. Governor Abbott agrees with us that an Article V Convention of states is necessary, and the time is now.

Allen Tharp is President of the San Antonio Tea Party.

 

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One Response to "Hey Obama, Business Doesn’t Work That Way"

  1. Dave R  May 13, 2016 at 2:06 pm

    Without a doubt, increasing government burdens are threatening our freedoms and our economic livelihood. Additionally, the feds are wanting to impose their morals on the rest of us (i.e. new bathroom laws). I think it is time that the States begin to assert their right to sovereignty otherwise the federal government regulations and burden will become too much. I certainly hope people are paying attention.

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