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Monday, January 18, 2010
The Merkley Amendment to Healthcare
Senator Jeff Merkley’s amendment to the Obama administration’s healthcare package seems to have a sole purpose: To toss the drowning construction industry an anchor. Slick and treacherous as black ice, Oregon’s Merkley – a Democrat, in case you had any doubt – wants to “level the playing field” by discriminating against small construction companies. Merkley sneaked the provision into the Senate’s healthcare reform bill in the wee hours before its passage on Christmas Eve morning.
Ostensibly, the amendment would force contractors with five or more employees and a payroll of at least $250,000 to offer their employees health insurance benefits. In reality, it will force small contractors to downsize. Merkley’s amendment would snare a builder with, say, seven employees, forcing him to either offer potentially backbreaking health coverage or pay $5,250 in fines EVERY YEAR if its employees use the reform package’s public option. Forced into this corner, a plucky contractor may make a last-ditch effort to remain solvent by firing two employees, dropping the company below the threshold and gaining an exemption. A more cynical contractor might well decide the deck is stacked against him and shut his doors, adding seven people to the unemployment line and seven families to the Welfare rolls. Multiply those scenarios by tens of thousands of small contractors in the country. How’s that for an economic stimulus package?
That open shop contractors will be hardest hit by the Merkley amendment is hardly a coincidence. Union firms by definition pay health benefits through their collective bargaining agreements with organized labor. Merkely’s placing non-union firms in his amendment’s crosshairs is further supported by the fact that only construction-related industries are targeted. Companies in other industries are exempt unless they employ 50 or more. While many other sectors are seeing signs of recovery, the construction industry still is wallowing in recession. It simply makes no sense to unfairly single out an industry that is flirting with, and in far too many regions, exceeding 20 percent unemployment.
Open shop contractors – about 80 percent of the industry – base their employee compensation, including benefits such as insurance coverage, on market conditions, company size and other management evaluations. Most – about 95 percent of the strictly non-union Associated Builders and Contractors’ 25,000 members, according to Geoffrey Burr, ABC’s vice president of federal affairs – offer coverage. ABC surveys reveal the other 5 percent can't justify the expense partly because “their margins are so thin they can't afford to do so,” Burr said.
My guess is that many contractors have decided to forgo health benefits rather than laying off employees as the economy continues to circle the drain. Incredibly, Merkley is not uninformed on this count. His spokeswoman, Julie Edwards, knows that “in the industry, the vast majority of it is comprised of small firms.” Treating construction like every other industry, she said, would mean that “virtually the entire industry would have been exempt.”
So, instead of exempting an industry of small businesses – the backbone of our nation – Merkley has chosen, as John Killin, president of the Pacific Northwest Chapter of ABC and executive director of the Independent Electrical Contactors of Oregon said, to deliver “a giant lump of coal in the stockings of America’s most economically challenged employers. It’s like [Merkley] is saying ‘Things aren’t bad enough for you so I’m going to make them even worse.’ ”
“At a time when our industry is facing the worst construction economy in decades, the last things contractors need are vast new mandates from the federal government dictating to them how they will run their business. Excluding small construction firms from the small business exemptions in the healthcare bill is irresponsible and economically disastrous” said Kirk Pickerel, ABC president and CEO.
The amendment passed without debate or a vote, so opponents can only hope to remove the onerous provision in conference committee. This does offer some hope, as it appears the Democratic senators who approved that chamber’s version were unaware Merkley had covertly inserted it. Jerry Howard, chief executive of the National Association of Home Builders, told media representatives that “I think that a great many Democratic senators were taken as much by surprise at the inclusion of this provision as we were.”
That may indicate that Merkley feared opposition even from his own party. But it also gives the amendment’s opponents some hope. If Senate Democrats are queasy about a provision that is sure to place additional burden on their state’s unemployment benefits, they may be willing to jettison it when they meet to reconcile the House and Senate versions of the healthcare bill.
I urge you to contact your senators and congressmen to impress upon them not only the inherent unfairness of the Merkley provision, but how the amendment, if it remains in the final bill, will cost jobs, kill competition and kick away any foothold the economic recovery may have gained.
Ostensibly, the amendment would force contractors with five or more employees and a payroll of at least $250,000 to offer their employees health insurance benefits. In reality, it will force small contractors to downsize. Merkley’s amendment would snare a builder with, say, seven employees, forcing him to either offer potentially backbreaking health coverage or pay $5,250 in fines EVERY YEAR if its employees use the reform package’s public option. Forced into this corner, a plucky contractor may make a last-ditch effort to remain solvent by firing two employees, dropping the company below the threshold and gaining an exemption. A more cynical contractor might well decide the deck is stacked against him and shut his doors, adding seven people to the unemployment line and seven families to the Welfare rolls. Multiply those scenarios by tens of thousands of small contractors in the country. How’s that for an economic stimulus package?
That open shop contractors will be hardest hit by the Merkley amendment is hardly a coincidence. Union firms by definition pay health benefits through their collective bargaining agreements with organized labor. Merkely’s placing non-union firms in his amendment’s crosshairs is further supported by the fact that only construction-related industries are targeted. Companies in other industries are exempt unless they employ 50 or more. While many other sectors are seeing signs of recovery, the construction industry still is wallowing in recession. It simply makes no sense to unfairly single out an industry that is flirting with, and in far too many regions, exceeding 20 percent unemployment.
Open shop contractors – about 80 percent of the industry – base their employee compensation, including benefits such as insurance coverage, on market conditions, company size and other management evaluations. Most – about 95 percent of the strictly non-union Associated Builders and Contractors’ 25,000 members, according to Geoffrey Burr, ABC’s vice president of federal affairs – offer coverage. ABC surveys reveal the other 5 percent can't justify the expense partly because “their margins are so thin they can't afford to do so,” Burr said.
My guess is that many contractors have decided to forgo health benefits rather than laying off employees as the economy continues to circle the drain. Incredibly, Merkley is not uninformed on this count. His spokeswoman, Julie Edwards, knows that “in the industry, the vast majority of it is comprised of small firms.” Treating construction like every other industry, she said, would mean that “virtually the entire industry would have been exempt.”
So, instead of exempting an industry of small businesses – the backbone of our nation – Merkley has chosen, as John Killin, president of the Pacific Northwest Chapter of ABC and executive director of the Independent Electrical Contactors of Oregon said, to deliver “a giant lump of coal in the stockings of America’s most economically challenged employers. It’s like [Merkley] is saying ‘Things aren’t bad enough for you so I’m going to make them even worse.’ ”
“At a time when our industry is facing the worst construction economy in decades, the last things contractors need are vast new mandates from the federal government dictating to them how they will run their business. Excluding small construction firms from the small business exemptions in the healthcare bill is irresponsible and economically disastrous” said Kirk Pickerel, ABC president and CEO.
The amendment passed without debate or a vote, so opponents can only hope to remove the onerous provision in conference committee. This does offer some hope, as it appears the Democratic senators who approved that chamber’s version were unaware Merkley had covertly inserted it. Jerry Howard, chief executive of the National Association of Home Builders, told media representatives that “I think that a great many Democratic senators were taken as much by surprise at the inclusion of this provision as we were.”
That may indicate that Merkley feared opposition even from his own party. But it also gives the amendment’s opponents some hope. If Senate Democrats are queasy about a provision that is sure to place additional burden on their state’s unemployment benefits, they may be willing to jettison it when they meet to reconcile the House and Senate versions of the healthcare bill.
I urge you to contact your senators and congressmen to impress upon them not only the inherent unfairness of the Merkley provision, but how the amendment, if it remains in the final bill, will cost jobs, kill competition and kick away any foothold the economic recovery may have gained.
Labels: Commercial, Construction Industry, Industrial
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