Washington Wages War On Small Business In U.s.

Posted: July 27, 1987

An old friend dropped by the other day. He's a businessman now, or rather an ex-businessman, and was explaining how he achieved that status. He had been part of a small company that had achieved a large success by contracting out handicrafts - until the Labor Department started raising questions about minimum wage, insurance benefits and 101 other complications. It's certainly not a unique story. To a great extent, it is the story of a small business in America, and it often has the same unhappy ending: The business closes down or moves overseas.

But our friend had this sentimental attachment to doing business in America. So he consulted the Commerce Department. There, he thought, small business would have a friend. He was right. The people at Commerce explained just how he could move his investment to Haiti or perhaps just across the border to Mexico where he would have a business-friendly atmosphere, a plentiful supply of cheap labor, and could help out a good neighbor.

"How about that?" our friend exclaimed. "Here's one part of the federal government driving my business out of the country and another ready to help me leave!"

Washington seems determined to make American business this country's chief export. My friend's story is only one example of what George Melloan of the Wall Street Journal calls the war on small business. Congress has opened a number of fronts:

* A bill to expand protections against job hazards - and therefore the costs of operating a small business - has been introduced in the Senate by Ohio's Howard Metzenbaum. It would require a business to maintain an employee's salary and other benefits if the worker were moved to a less hazardous job. American firms with large investments overseas may not have any problem with this requirement. To quote one businessman: "The electronics industry, which has indicated support for the bill, is able to have its products manufactured in the Pacific Basin and in Latin America, where no such requirements exist." Companies that stay home, however, will be pressed that much harder - to leave.

* Another bill would require companies to give 90 days' notice before closing plants or laying off more than 50 workers. And if the company planned to cut workers' hours by more than 50 percent over six months, it would also have to give 90 days' notice. What investor is going to risk a new business - at least on American soil - if he can't close a losing operation without losing considerably more?

* Another proposal would require all companies to provide group health insurance. "Since all large and unionized companies provide such benefits," to quote Warren Brookes in the Washington Times, "the only target is the small, new business that can't afford them."

* And then there is the surest of depressants for small business: Another increase in the mimimum wage, this time up 30 to 40 percent with the object of maintaining it at half the average hourly wage in the future. Again and again, the minimum wage has been raised, and again and again, small businesses have had to fire workers, cut hours or not replace them when they leave. But we never seem to learn. This bill would cost the jobs of between 124,000 and 619,000 young workers, according to projections of the General Accounting Office. Logically, the minimum wage should be decreased, to encourage new jobs and more work for those already employed. But politically, that may be impossible. The idea is unspeakably sensible.

The massive effort to kill the goose that lays the jobs continues at Washington and particularly in Congress. It's all enough to bring back the old joke about the three biggest lies in the world: "The check is in the mail . . ." "I gave at the office" and biggest of all: "I'm from the federal government and I'm here to help you."

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