By Mike O’Halloran
With each campaign season comes considerable promises to the small business community. Politicians show up at Mom and Pop stores for photo ops, take walks down Main Street and espouse dedication to empowering entrepreneurs by deregulating and creating pro-growth environments.
When Larry Hogan was on the campaign trail, he often cited the fact that as a small business owner, he understood better than any other candidate how difficult it was to remain operational in a state that never seemed to fail in punishing employers with ill-advised policies.
The more that he articulated his vision for a brighter future for Maryland, the more voters liked him. There was less rhetoric and more conviction in a candidate seeking to become Governor. The electorate agreed with his message of making “Maryland Open for Business.”
Since taking office, Governor Hogan has established the Regulatory Reform Commission that has had great success in eliminating redundant regulations and encouraging private sector growth.
Legislature prefers business mandates
While the administration continues to focus on pro-business policies, the legislature proved this year with the passage of House Bill 1 that they are determined to run interference. While the governor and his team focus on deregulation, legislators are attempting to mandate the amount of time off an employee can take from their job.
Fast forward two-plus-years from Governor Hogan’s election and we are just days away from a deadline to act on a mandatory paid leave bill that will cripple the small business community and send a terrible message to Maryland’s would-be entrepreneurs.
It was not long ago we heard Gov. Larry Hogan declare House Bill 1 “dead on arrival” should it reach his desk. From the time he made that declaration to the time the Legislature presented him with the bill on April 27, nothing has changed that should give the Governor pause on carrying out his threat.
NFIB study shows serious impact
NFIB’s Research Foundation conducted a study earlier this year that clearly demonstrated a loss of $1.5 billion in economic output and 13,000 Maryland jobs by 2027 could take place if House Bill 1 is enacted. The report takes into account the cost of complying with mandatory paid leave as well as the impact that paying workers for taking leave will have on employers. Of the noted job losses in the report, 57% would occur within the small business community.
The fact is this bill will fundamentally change how businesses offer benefits to attract employees. We all know that employers offer benefits like paid time off, health insurance or retirement plans to compete amongst each other for well-qualified employees.
Mandating a benefit, as House Bill 1 does, will make it impossible for hundreds of small businesses to remain competitive. Requiring small companies, who would otherwise work with their employees to offer benefits that make sense for everyone involved, to now offer a full week of paid time off places a hardship on them they will not be able to overcome.
Our study clearly shows the detrimental side effects of mandatory paid leave over the next 10 years. It would come at the unaffordable cost of thousands of jobs and add yet another hiring deterrent for employers throughout the state. Worse yet, it will force small business owners to make very difficult choices that may result in a reduction of existing benefits, fewer work hours, or in the worst scenario, elimination of jobs. In other words, it’s virtually impossible to take a day off from a job that no longer exists.
Detrimental side effects
Mandatory paid leave was conceived by misguided supporters that fail to understand what it takes to operate a business on a day to day basis. Many supporters have referred to unpaid leave as an innocuous mandate but whether it is paid or unpaid, mandating the day to day operation of a small business comes at a cost for our employers.
Seeing these sorts of bills in the General Assembly is nothing new, but what makes the paid leave fight so frustrating for small business owners is that they are being told what is best for their business. Gov. Hogan ran a business for years and knows the difficulties employers face in complying with regulations like the ones that would be thrust upon them if HB 1 is not vetoed.
The fact that small business owners will bear the brunt of the mandatory paid leave consequences makes his lack of a veto thus far very concerning for them.
Small business has made great strides under the administration of Larry Hogan. We remain hopeful the progress he and his administration have made thus far in improving Maryland’s business climate will continue, and he will honor his promise to protect employers from additional mandates and employees from losing current benefits or worse yet, their jobs by vetoing House Bill 1.
Mike O’Halloran is the Maryland State Director for the National Federation of Independent Business (NFIB)