This summer, millions of Americans will hit the road and take
vacations at one of the more than 50,000 hotel and lodging properties we
represent. Many of these establishments actually have 50 or fewer
rooms, qualifying them as small businesses. These hotels and motels,
which provide a pleasurable destination for the summer traveler, are
very much like millions of other small companies that are driving
American economic growth. As we honor the hard work of businesses like
these during Small Business Week, we should be mindful of spiraling
costs that may eventually threaten these businesses, like the
ever-rising cost of health care.
This week, we should be optimistic about the present (an NFIB poll from
earlier this month showed U.S. small business confidence at a one-year
high) while carefully considering our concerns for the future. Despite a
certain amount of optimism, small business job creators are still
struggling to pull themselves out of the recession. According to a
recent report from payroll-processing firm ADP, small business hiring is
down nearly 50 percent from the start of the year. When you also
consider that unemployment increased during May for the first time in
2013, you recognize there remains untapped potential for economic growth
that could touch every industry and community in the country.
So
what is the reason for the disconnect between small business optimism
and a hiring slowdown? What stands in the way of a possible small
business boom? While each individual business faces its own growth speed
bumps, one possible answer may be the upcoming implementation of the
Patient Protection and Affordable Care Act (PPACA) and, more
specifically, its health insurance tax.
Often lost in the broader debate over PPACA is a tax on health
insurance policies sold in the fully-insured market. Since 88 percent of
small businesses and the self-employed purchase their health insurance
through the fully-insured market, this health insurance tax, or HIT,
will be borne overwhelmingly by the small business community in the form
of higher premiums. In fact, a study by Douglas Holtz-Eakin, a former
head of the non-partisan Congressional Budget Office, predicts the HIT
will cost the average family $5,000 over the course of the next decade.
This
runs counter to the stated intent of the health reform legislation.
Increasing health insurance premiums on the 34 million small business
employees and the self-employed who purchase policies subject to the HIT
is no way to ensure “affordable care.”
With the HIT taking
effect in just six months, businesses are already planning for its
impact. Those preparations could be behind the slow small business job
growth. An April Gallup survey found that a plurality of small business
owners – 48 percent – think PPACA will be bad for business. Even more –
51 percent – are holding off hiring additional staff because of concerns
about the new health law. That is troubling, because small businesses
could hold the key to lowering the national unemployment rate from its
current position at more than seven percent. After all, small businesses
have accounted for about two thirds of net new jobs since the 1970s.
We
do not need to settle for the HIT handcuffing small business job
growth. Bipartisan legislation introduced in the House of
Representatives by Representatives Charles Boustany (R-La.) and Jim
Matheson (D-Utah) would repeal the HIT. Together with its Senate
companion bill, more than 200 bipartisan cosponsors have signed on to
take action and lift an unnecessary burden off the back of our nation’s
job creators. These policymakers should be applauded, and their concerns
heeded.
While we pay special attention to small businesses
during Small Business Week, with commonsense legislation and policies
that promote economic growth, the nation’s job creators, including the
hotel and lodging industry, could realize sustained growth and stability
for many years to come.
Lugar is president and CEO of the American Hotel & Lodging Association.