Obama’s policies are less than stimulating

Alfred "Pappy" Brunet
July 30, 2009
Joseph Henry Elkins
August 3, 2009

The economic policies over the last decade have created a great disparity in income among the richest 2 percent of Americans and the rest of us. While President Obama professes to be the person to correct this disparity, there is growing concern that another group will pay the price – small business owners.



If the stimulus package is any indication, there is reason for concern.

The American Recovery and Reinvestment Act (aka the “Stimulus Bill”) was signed into law on Feb. 17, but the details are only now being known.



Among the items in the bill is an extension of unemployment benefits for those whose benefits have been exhausted. There is also a $25 per week increase in the minimum benefits allowed – doubling the current Louisiana minimum – and a subsidy to fund 65 percent of the health insurance costs for workers who are fired or laid off.



While this is all good news for those out of work, the strings attached to the funding will eventually have a negative impact on small business owners … and the economy.

To receive the extended unemployment benefits offered in the bill, Louisiana would be required to change its unemployment compensation laws. Part-time workers would then be allowed to receive unemployment benefits. Depending on the number of hours they work each week, the $50 per week minimum benefits could be more than an unemployed part-timer worker received while employed.



And while those currently unemployed in Louisiana are required to seek jobs while receiving benefits, the state would be forced to eliminate this practice to receive the federal funds.



This would drive up the unemployment insurance costs for small businesses and give unemployed workers less incentive to seek jobs.

It is also likely that small business owners would need to offer unemployed workers considerably more than their unemployment benefits to convince them to take a job. This would reduce the labor pool and drive up wages in the process.



It could also result in small businesses no longer hiring part-time workers, eliminating jobs normally filled by high school and college students.

Currently, workers do not qualify for unemployment in Louisiana if they voluntarily leave their job. To receive funds in the Stimulus Bill, Louisiana would be forced to change this law and allow unemployment benefits to be paid to workers leaving their jobs because of “compelling family reasons.”

Workers could quit their job and the small business would still have to pay.

Another provision in the Stimulus Bill also makes it possible that employees could quit their job, collect unemployment and receive better health insurance benefits than they received while employed. This is a result of a requirement on business owners to pay 65 percent of the health insurance cost of employees and their families should the employees be fired or laid off.

Some businesses only pay 50 percent of their employees’ individual health coverage. Now that the Stimulus Bill is the law, these businesses will actually pay a higher level of benefits to former employees than current employees.

This provides greater incentive for existing workers to encourage termination.

Some small business owners have vowed to cancel all health insurance benefits as a way to avoid paying insurance coverage for former employees. Others have increased the health insurance waiting periods for new employees to reduce the risk of hiring the wrong person.

The president is also promoting new legislation raising taxes on the oil industry, a move that some estimate would result in the loss of over 10,000 jobs in Louisiana.

With a struggling economy our nation needs more jobs, with more incentives for businesses to create jobs and employees to fill them. The Stimulus Bill works counter to these needs, and President Obama should recognize this.

He might not see this column, but the president will see the Dow Jones Industrial Average … both are telling him his policies are less than stimulating.