I am typically a very positive person; one who sees the glass as half full. I think you almost have to be overly optimistic to succeed as a business owner these days. That is why I found it strange that I was so discomforted by waiting in the conference room at the regional OSHA office. As I sat there waiting for the director to attend the meeting, thoughts about how our government targets small business filled my head, and my normally sunny outlook turned gray.
Everyone is familiar with how the construction industry has been challenged over the past five years. It is heartbreaking how many architects, contractors, developers, and manufacturers have been forced to call it quits during the recent recession.
It strikes me as strange that during this time of economic hardship the government would be applying more pressure to small business. It seems to me that we are seen as a vital source of governmental revenue at the worst possible time. The cost increases of Affordable Healthcare, pension fund guarantees, OSHA, and other programs seem to be preying on the small business survivors.
Read my series on this issue of a half-glass business outlook
Let’s take a look at the Affordable Heathcare program first. This has got to be one of the greatest oxymorons of all time. There is very little about the new healthcare program that is affordable for small business. My company has always offered excellent health, dental, and vision insurance for our employees.
Just recently, we were informed that our premiums are going to increase by 30 to 40% next year because of the new national healthcare program. This is especially confounding when it was reported in the Wall Street Journal yesterday that healthcare costs increased by only 1% over the past twelve months. So how does a young and healthy group like Re-View have such a dramatic premium increase during a period of minor cost increases? I can only conclude that small business is helping to fund the program.
So what does a struggling business do? Many companies are going to discontinue insurance coverage, while others will decrease the quality of coverage to be able to afford it. Large companies are reclassifying employees to part time and reducing hours to avoid paying insurance. Walgreens, for example, just discontinued its health coverage and is going to offer a stipend to employees who qualify to purchase their own program on the exchange. It doesn’t sound like any of these survival tactics are good for the typical American citizen.
The decrepit pension system is another issue that affects many in the construction industry. A high percentage of the labor unions have underfunded pension plans. This was caused by a dramatic decrease in construction employment that directly reduced the contribution amount. Our country also has an aging workforce so the number of people covered by most pension funds is rapidly increasing. Add to these factors a challenging investment environment and you can easily see why many pension plans are close to broke. How does this affect you?
The Pension Protection Act of 2006 applies the burden of funding a pension to the employer. So if you are signatory to a union and that union has an underfunded pension plan, you might have to contribute additional money to correct the shortage.
We frequently receive reports from our union affiliations across the country informing us of the precarious conditions of the local union pension plans. Very few plans are in a healthy standing. One plan was placed in critical status and we were required to pay thousands of dollars in addition to what was originally part of the standard plan. It can be an unsettling experience to be confronted with a major payment after you have dutifully contributed according to the tenets of the original plan.
And finally let me discuss my good friends at OSHA. As I was waiting in the conference room for 30 minutes for the area director to make our scheduled meeting, I noticed a chalkboard in the room. The board boldly outlined the new annual sales goals for OSHA. The total number of inspections was prominently displayed as well as the individual breakdown by compliance officer and his specific percentage of goal achieved. Encouraging words such as “We only have 22 more inspections to meet our goal!” emblazoned the board. The sales consultant, Jeffrey Gitomer, would have been proud of the sales incentive system displayed in this OSHA office.
I didn’t realize that OSHA was a governmental sales organization. I thought its mission was to promote and enforce safe work practices in American business. But it was obvious from this chalkboard that the new mission is to produce increased revenues from fines generated from inspections. I wouldn’t doubt that OSHA pays a commission to inspectors based upon completed inspections and revenues.
Our company happens to have an industry classification that puts us in a high risk for amputees since we engage in woodworking. As a result, OSHA calls on us every two years for a surprise inspection. Over the past six years, we have had three inspections. When an inspector visits, he has to leave with a list of violations. Several inspectors have told me that it is so easy to find violations that they could find a dozen back in their office alone.
We spend a lot of time and money on safety and haven’t had a lost work injury for six years. But that didn’t stop OSHA from finding items like frayed insulation on a grinder, a ground missing from an extension cord, a ladder leaning against a paint booth, and other minor offenses. When all the fines are added up, the wages for the inspector and the cost for the swanky OSHA office space was more than covered. Once again, business is called upon to contribute.
So what is small business supposed to do about the prevailing conditions in Washington? One thing we can do is to support business-minded politicians who will recognize the importance of supporting the vitality of the small enterprise. Another thing we can do is to get the message out about the governmental challenges that hamper the health of businesses in the construction industry. Maybe this will motivate changing the system. And finally, we can maintain our optimism that the current circumstances will eventually improve at sometime in the future.
Now where did I put that half-full glass of water?