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Blogs and Articles

30% Tax Increase Means Trouble for Small Businesses

The 2021 Legislative Session is under way, and your legislators wasted no time bringing forth bills to hurt Delaware workers and businesses. One would have expected that, in light of the pandemic and the turmoil it caused for the economy and business climate, Delaware lawmakers would have avoided these types of bills. You’d be mistaken.

Despite the projected $500M surplus this year, House Bill 64 would establish new tax brackets of $125,000 at 7.1% $250,000 at 7.85% and above $500,000 at 8.6%.

Currently, all income above $60,000 is taxed at a rate of 6.6%. This tax increase will serve as yet another stream of revenue for an ever-increasing budget, despite a lack of need. The main purpose of the income tax is to raise revenues for the government, but with a major surplus and lack of results from previous funding increases, we question the motives behind the bill.

Additionally, Delaware already has unfavorable rankings when it comes to taxation. We have the 18th highest income tax burden. Delaware has the 7th worst taxpayer ROI and 7th highest taxes per capita—even higher than neighboring New York and New Jersey. Yet, here comes another tax increase.

Increases in the income tax are connected to individuals having less discretionary income (spending money) and less of an incentive to work, since take-home pay will decrease. Delawareans have already faced layoff and business closures, yet lawmakers are set to tighten their purse strings for them.

Interestingly, the lack of incentive to work can actually reduce the revenue brought in from the tax.

Perhaps this is why seven US states don’t impose state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Not having to pay a state income tax is believed to help individuals of all income classes, who would are able to keep their hard-earned money and save for retirement, vacations, school tuition and more.

The impact doesn’t stop there.

This legislation goes beyond individuals. Many small business In Delaware are filed as S-corps and pass-through LLC’s, and therefore file business taxes under the individual income tax umbrella. This means HB 64 bill will not only “tax the rich,” but tax our small businesses that have already been struggling to keep employees and stay open throughout the pandemic.

Delaware was already ranked one of the top ten worst states to start a business, largely due to having one of the worst business environments in the nation and 7th highest business costs. The impact of the pandemic has only worsened the situation in the First State.

Higher tax rates can increase the chance that businesses fail, which is already a major concern in the current economic climate. Our lawmakers should hold off on anything that makes this worse. Increased rates can also hurt entrepreneurship, forcing individuals to seek secure, good-paying jobs. Higher taxes on business means it is less likely people will move their businesses here, as well as some state businesses leaving or reducing capital expenditures and halting growth plans.

We ask that you contact your legislators via this form to speak out against a 30% increase in the income tax: https://www.votervoice.net/ABetterDE/campaigns/68445/respond

Will Delawareans be welcomed in the 2021 Legislative Session?

Delawareans take a lot of pride in our little state, and so do we at A Better Delaware. That is why we are working to improve the state for every Delawarean, and for our future. The 2021 Legislative Sessions begins on Tuesday, January 12, and we will continue to advocate for you and your businesses throughout Session.

Currently, our representatives and leaders are not working to truly improve Delaware, and Delawareans are tired of seeing their state suffer because of it. Now is the time to critically think about the decisions that have been made in Dover, who is making them, and why. The 2021 Legislative Session could be the one to solidify the poor national standings A Better Delaware frequently reports on. It may push us further down the path of mediocrity, or could be the one that makes a decisive change that puts the First State back on top.

One such issue is that Delaware state government tends to minimize or even diminish the role of the citizen in decision-making, to the detriment of its constituency. Without transparency and accountability to influence better decisions, our officials are free to pass legislation to their own benefit, instead of that of its people.

The transparency issue with Delaware state government has been clear each time a bill is held until the last minute, or rules are suspended to bring forward a bill that was not on the agenda. Information is frequently withheld from constituents and stakeholders.

Transparency and the resulting ability to hold elected officials accountable have long been major issues in Delaware government with implications that span policy, spending, and public faith in government, but access should be easier than ever with virtual meetings and digital communication.

Evidence shows that government secrecy can lead to a lack of accountability and abuse of power, and when a local government isn’t forthcoming, it weakens the trust between the officials and their constituents.

Weakened public trust in government can lead to citizens and businesses becoming more risk-averse and delaying investment, innovation and employment decisions that impact economic growth and development. Establishing and focusing on transparency is an investment in economic recovery the future of the state.

Delawareans were teased with the promise change one year ago, when Delaware General Assembly leaders Sen. McBride and Rep. Schwartzkopf announced a new rule which made June 10, 2020 the last day that House or Senate committees could consider bills that originate in their respective chambers. In May, Rep. Schwartzkopf doubled-down on the promise, by asserting the General Assembly would “concentrate on the money bills,” and that anything beyond would need to be refiled in the start of this upcoming legislative session.

Legislators quickly went back on their word when session resumed virtually.

The purpose of the rule was to encourage public involvement and prevent bills from being rushed through at the end of session.

“The public isn’t fully aware of what we’re doing,’ President Pro Tempore, Senator David McBride said. ‘It’s not that we’re trying to do it without their knowledge. It’s just that things come up.”

Why, in the digital age, won’t our legislators communicate to the public upcoming bills that impact the state’s residents and businesses? What is the reluctance for legislators to hold themselves accountable, or continue to keep the state in the dark?

Voters need to speak out against legislation that is detrimental to their families, communities, businesses, or finances, but must be aware of upcoming bills to do so. In order to do better, our lawmakers must act better. As we approach the 151st General Assembly, it is important to advocate for change by advocating for transparency and accountability in our state government.

Stay up to date on important issues and how to take a stand during this Session by keeping up with our social media, emails, blog, and VoterVoice platform.

Happy New Year!

As the new year approaches, many of us are thinking of ways we can change for the better and making resolutions for 2021. We want to know: is Delaware government and leadership doing the same? If the past any indication, it is unlikely to expect any self-reflection with budgeting, policy, or many other items. Here at A Better Delaware, we decided to make a 2021 resolution list for them:

Improved Transparency and Accountability

Delaware state government tends to minimize or even diminish the role of the citizen in decision-making, to the detriment of its constituency. Without transparency and accountability to influence better decisions, our officials are free to pass legislation to their own benefit, instead of that of its people.

A better way: allow for maximum transparency by livestreaming the session, allow public access to session, file bills publicly with ample time for public and official review, and no longer pass important pieces of legislation overnight on the final day of session.

End Corporate Welfare

Delaware’s game of corporate welfare is “a hell of an expensive lesson picking winners and losers,” and Delawareans are clearly the losers. Bloom, Fisker, and Solenis are just a few examples of expensive failures when it comes to big money for companies on the Delaware taxpayer’s dime.

A better way: Delaware lawmakers and leadership should reconsider their past failings and learn from their mistakes when approaching economic development via corporate incentives. After all, the definition of insanity is doing the same thing over and over again and expecting a different result. Instead, we must attract businesses by having a better business climate with lower taxes and less regulation.

Be kinder to business

According to the 2021 State Business Tax Climate Index from the Tax Foundation, Delaware is ranked 50th in the nation for corporate taxes. Unfortunately, Delaware is no longer the business haven it once was. Factor in the sub-par help offered to struggling small businesses statewide during COVID and proposed measures like minimum wage and other employer mandates set to come up in the 2021 Legislative Session, and one could assume the goal is to force our businesses out of business.  In 2021, lawmakers must do better.

A better way: now is not the time to add any additional burden to small and local businesses that are still trying to stay afloat or recover from the pandemic. Instead, we should find ways to support them and boost employment.

Sunset the Health Resource Board (Certificate-of-Need)

Delaware is one of 35 states with Certificate-of-Need (CON) laws, in the form of its Health Resource Board. Despite a federal recommendation of repeal in 1986, the First State has kept this entity that raises health care costs and limits access to care. Without this Board, Delawareans could save $270 on average, have more local health care services, and be healthier overall.

A better way: It’s time for the legislature to sunset the Health Resource Board/CON. Delaware’s health indicators are mostly troubling, and COVID-19 has highlighted many shortcomings and demand for health care, which have been held back by the CON laws for the past 30 years.

Reform Taxes and Spending

With a projected $500M surplus, there should be no tax increases after the upcoming property tax reassessment. Our state budget (General Fund, Grant in Aid, and Bond) should not establish new spending, especially due to this revenue mostly being one-time funding. The last $200M “surplus” was the exact amount of additional revenue brought in by new tax increases implemented in 2017, and is responsible for some of the new surplus as well.

A better way: replenish the Budget Smoothing Fund and increase the Rainy Day Fund to prepare for the next statewide hardship. Additionally, it is imperative to pay down the massive pension deficit Delaware has. We can use this reassessment and new revenue to reduce our real estate transfer tax, which is currently the highest in the nation.

This may be a relatively short list in comparison to the many issues we at A Better Delaware see in the First State, but we will continue to tackle every issue that falls under our platform in 2021. We hope you’ll join us.

Our resolution is simple: continue to do what we can to fight for Delaware taxpayers and businesses and make Delaware a better place to live, work, and start or own a business. Happy New Year! We look forward to advocating for and with you in 2021.

Why is the state so out of touch from what its own residents are going through?

There is little public attendance or media coverage of public budget hearings that deal with billions of taxpayer dollars. Public involvement is severely missed in this process. Delawareans are simply presented the Governor’s proposed budget in January, after many hearings and proposals are done and considered.

The Governor holds a significant amount of power in the process, which results in a near-complete state budget before the Joint Finance Committee hearings even begin in February. Due to the lack of attendance at the initial budget request hearings, February would essentially be the public’s first say in the process (through their elected officials on the JFC). However, the JFC does not have as much say as you might imagine, with pre-allocated funds for schools, government agencies and more.

In a bid to enhance the transparency of this process and to hold not only the Governor, but the agencies presenting budgets accountable, A Better Delaware has summarized what was delivered in the recent budget request “public hearings,” below.

Strikingly, there was clear disregard and complete lack of sensitivity to what many Delaware businesses, households, and residents have been through during COVID-19. While businesses were forced to reduce their operations or even close down—costing revenues, jobs, and even life’s work—Delaware agencies are presenting budget requests with 4%+, 9%+, and 18%+ increases over FY 2021 budgets.

Why is the state so out of touch from what its own residents are going through?

The Department of Agriculture submitted a budget request that was the same as FY 2021, stating:

 “This request is fiscally responsible while allowing our Department to fulfill its mission of serving our agricultural community and providing a wide array of consumer protection services for Delawareans.”

Unfortunately, other agencies operated as if the coronavirus was a hallucination, and moved forward with ever-increasing budget requests, despite a state revenue forecast that could change any day.

The Department of Justice requested a 3.49% increase to hire dozens of new attorneys and staff. How much funding and how many attorneys are going towards the numerous out-of-state affirmative litigation cases that Delaware has joined in on recently? Meanwhile, workers in Delaware across various industries have lost their jobs due to COVID.

Delaware State University requested a 9.76% increase, much of which can be attributed to “campus improvements.” With DSU’s president now working for Biden and bringing in multimillion dollar donations, the request should be updated to show some fiscal responsibility and remove the burden of this massive budget increase from the state’s taxpayers.

Perhaps the most alarming is the unabashed 18.75% increase requested by DELDOT. Despite continuing with full funding during the pandemic, the agency has presented the largest budget increase in the state, totaling an additional $62.1M in taxpayer dollars. DELDOT was able to keep their full budget, receive federal CARES Act funding, and is now asking for a budget increase on top of that. Meanwhile, our restaurants, hotels, retailers, and more are losing capacity, revenues, staff, and even shutting down—with limited assistance offered to prevent this.

Delaware taxpayers turning a blind eye to the budget formation process has unwittingly enabled state leaders to abandon the concept of fiscal responsibility when it comes their money.

Minnesota and New Mexico have been examining better government spending through a partnership with the Pew-MacArthur Results First Initiative, where policymakers look at the effectiveness and return on investment of programs to determine where to allocate taxpayers dollars. For example, Minnesota agencies were asked to provide evidence of desired outcomes along with their budget request for each program. This was not present in many Delaware agency presentations.

It’s time for Delaware lawmakers and our Governor to actually address the ever-growing budget by instituting a policy of data-based spending. Agencies can use existing funds more efficiently, invest in programs that improve life for the state’s residents, provide more economic opportunity, and show that they can operate by normal budgeting standards that businesses and individuals already do. There have been efforts to fix this here before, but they have failed.

The Government Accountability Act, a bipartisan bill that never made it to a vote, would have made the annual budget process part of a “performance management system of strategic planning, performance metrics and performance budgeting,” that would make State government more efficient, reduce costs, and eliminate waste in the process and operations executed by the state.

Another bill that never made it to a committee hearing would have implemented a mandatory window to wait before voting on any budget bill, in order to allow for adequate evaluation and discussion before being pushed through. While not bipartisan, this bill would have forced lawmakers to actually read the budget before voting to pass it.

The time to do better and be better is now.

Delaware can’t brew expansion

Delaware has almost one dozen craft breweries and brewpubs, some with multiple locations statewide, but the industry could be growing more than is currently allowed. In what sems to be another arbitrary thing on our books, Delaware law prevents these establishments from expanding beyond three locations in the state.

In September 2019, the popular Iron Hill Brewery grew their business 20 miles over state lines in Exton, PA due to this restriction. Iron Hill wanted to expand in Delaware, but simply couldn’t, pushing them to take their business—and the jobs it created—across state lines.

“It puts an unnecessary burden on these companies that are trying to expand and create jobs here in Delaware,” said State Representative Bryan Shupe, “We’re hindering their ability to compete.”

Representative Shupe sponsored a bill in 2019 that would have eliminated this limit on brewpubs, though it never made it out of committee. A new version of the bill is expected in 2021, and the hard lesson from Iron Hill should push lawmakers to reconsider the measure in a bipartisan manner.

Not only does the current limitation hurt small businesses, but stalls the growth in jobs that they could provide. After the major hit to our labor market from COVID-19, anything that hurts job creation should be heavily considered, and at minimum given a chance to be heard, unlike in 2019.

Our local businesses are struggling to stay afloat. Many brewpubs are a part of the restaurant industry, which has been hit particularly hard by the pandemic. Nationally, the restaurant sector had already lost $120 billion in sales by May, only 2 months after the initial restrictions were enacted. In Delaware, Governor Carney’s new COVID-19 restrictions limiting restaurant capacity to 30% went into effect on November 23.

These businesses cannot survive on takeout alone, which may soon be the case. The 100% costs of staying open aren’t covered by the 30% of sales they are able to bring in. According to the Delaware Restaurant Association, up to 30 percent of Delaware restaurants could close if they do not receive assistance.

This is stacked on top of the struggle of being locked in place by the current Delaware Code.

“You have to pick three locations that have the best opportunity to grow your business and make money. These smaller communities without brewpubs, I don’t think they are going to see them,” Harry Metcalfe, co-owner of Revelation Craft Brewing Company said.

The brewpub restriction is only one example of the burdensome regulatory code that exists in Delaware. These regulations hurt all types of businesses statewide and are rarely reviewed or changed.

As of last year, Delaware’s regulations included 104,562 restrictions, 6.7 million words, and would take 9 weeks to read through—and all of this is in addition to federal regulations. For a small state, that’s quite a regulatory burden.

Delaware ranked 42nd for its regulatory environment and 37th for economic environment pre-COVID. Our lawmakers should be working to serve those they were elected to represent by addressing the job killing regulations. The brewpub bill is a good place to start, but is hopefully one of many steps in a process to truly better our state.

The Restaurant Industry: The Other COVID Fatality

You’re hearing it everywhere: this pandemic has really hurt small and local businesses. Perhaps one of the most impacted by COVID-19 restrictions has been the restaurant industry. Restaurants typically have extremely small profit margins, meaning any hit to their operations could spell disaster.

Nationally, the restaurant sector had already lost $120 billion in sales by May, only 2 months after the initial restrictions were enacted. The reach of this loss must be understood; a blow to this industry kills a large percentage of jobs, and hurts other businesses from florists, to food packagers, to liquor salesmen, and more.

The situation for restauranteurs is dire: Yelp reported that by May, 53% of the restaurants on their platform were now permanently closed, while OpenTable said one in four were at risk of foreclosure. These numbers were when other options, like outdoor dining, were available. As we move into the winter months, it is difficult to grasp the impact this may have.

Governor Carney’s new COVID-19 restrictions limiting restaurant capacity to 30% went into effect on November 23. This new Executive Order will further cripple an entire industry that has been struggling—and failing—due to similar orders for eight months.

These businesses cannot survive on takeout alone, which may soon be the case. The 100% costs of staying open aren’t covered by the 30% of sales they are able to bring in. For many, this year was the one in which their business, livelihood, and dreams shut down forever. According to the Delaware Restaurant Association, up to 30 percent of restaurants could close if they do not receive assistance.

If only 1.44% of Delaware’s positive COVID cases in November visited a bar, and 4.63% a restaurant, why are we targeting this industry?

The Delaware Restaurant Association reports close to 2,000 eating and drinking locations in the state, which provide around 50,000 jobs and $2 billion in sales. This sector is the largest small business employer in Delaware. Carrie Leishman, President of the Delaware Restaurant Association, estimates thousands of workers losing their jobs around the holidays due to the new limit.

Meanwhile, retail and other industries have operated without issue, despite being a major catalyst for public crowds. Black Friday produced a packed crowd at the Christiana Mall, even in the food court. The absolutely arbitrary parameters of what has made a business “essential” is precisely what is killing this massive industry nationwide.

Delaware’s economy cannot shoulder this burden. Pre-pandemic, we were ranked 34th for employment and one of the worst states for small business. Now we face hundreds or thousands more jobs on the chopping block with less unemployment assistance from the state than before. The Delaware restaurant industry has received about $25 million in state assistance so far, and anticipates $25 million more. Unfortunately, it may not be enough to counter the restrictions.

Add in the newly drafted minimum wage bill and other costly proposed employer mandates that are likely to be brought forth for a vote in the 2021 Legislative Session, and our restaurants—and the jobs that they offer—may never recover. It is far past time to take action and save livelihoods, not just lives.

COVID won’t be the only job killer with this bill

Delaware lawmakers wasted no time preparing for the 2021 Legislative session after the election. One may think the priority would be to help Delaware businesses and workers recover from the impact of COVID—19. Unfortunately, you’d be mistaken, since one of the first bills being circulated is legislation that would actually do the exact opposite.

A draft of a bill to raise the minimum wage to $15 an hour by 2026—which would amount to a 61.6% increase—has been drafted and circulated for co-sponsorship. If you thought COVID took jobs and hurt our small businesses, just wait until this upcoming session.

The unintended consequences of raising the minimum wage have already been seen in New York, San Francisco, and Illinois. In San Francisco and New York, the restaurant industry has been hit especially hard by the measure, with many businesses raising prices (and losing customers), cutting hours, reducing staff, and some even filing for bankruptcy. When New York City’s minimum wage was raised to $15 per hour, there was an overall decline in restaurant workers, despite total employment increasing by more than 163,000 workers.

Owners tried raising menu prices and adding an extra surcharge to customers’ bills, but restaurants were no longer profitable. Many industries will face the same problem and their businesses will reduce worker hours or the number of workers, scale-back production, turn to automation, or shut down. Businesses want to pay their workers more, but government-mandated increases in wages hurt employment and the overall economy.

The Delaware restaurant industry has had a particularly tough time during the pandemic, and would be crushed by a mandate like a minimum wage increase for at least a few years. It took the First State six years to recover from the 2008 recession. Despite the numbers being far worse than twelve years ago, the new minimum wage would start in just one year.

Our small businesses and low-skill and low-income workers would have no chance, though one is desperately needed. When asked about this, Central Delaware Chamber of Commerce President Judy Diogo told Delaware Live, “It’s going to take [Delaware businesses] a couple of years to recuperate from [COVID—19]. They are not going to get over that in a year. So we need to give them some time to get past that, but we also do not believe the state’s government should be mandating wages.”

Business groups aren’t the only ones who understand this. Make no mistake, the very people pushing for $15 understand the consequences this mandate presents. When signing California’s $15 minimum wage into law, California Governor Jerry Brown said that “Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense.”

Feel good policy doesn’t always do good. In this case, it hurts the very people it claims to help: low-wage and low-skill workers, disabled workers, former inmates, and more. Prices will go up and goods will become too expensive for most and the new “livable wage” will no longer be livable. You cannot mandate a market shift.

Florida and Maine recently joined the list of places with a $15 minimum wage. Delaware shouldn’t join just to feel good. Our lawmakers in Dover must look at the real implications of their decisions and do what is truly best for Delawareans and Delaware businesses. Increasing the minimum wage in the midst of a pandemic that crippled the workforce and businesses alike is not in the best interest of anyone but themselves.

Regulations: too many to be all good

The original intentions behind regulations were to address market failure, promote economic and social welfare, or advance other goals of policymakers, but even regulations with the best intentions have raised concerns for their unintended consequences. Additionally, many federal and state mandates have been reactive in nature, instead of forming or contributing to a coherent government strategy.

The reach the impact of regulatory bodies has had is immense. Small businesses feel the weight of the regulatory burden at the local, state, and federal levels, massive corporations base location and expansion based on regulations, and the sum total of regulation has led to slowed growth and competitiveness of many countries. Regulations impact a lot.

Take the occupational licensing regs of today. These requirements serve as a barrier to entry into the market, just as they were intended to decades ago as a response to racial or ethnic prejudices. are the legacy of earlier efforts to protect profits by limiting entry to the market. Modern occupational licensing is branded as necessary for quality control, but still works to protect the earning power of established providers. This is harmful to small businesses and entrepreneurs, and has recently been an issue with hair braiding at home.

Remember the EpiPen price scandal? The ridiculous price increase that left many in danger of serious complications from allergic reactions was possible because of regulations. There were few substitutes for EpiPen, which shielded it’s supplier from competition and allowed for a drastic price increase to around $600.

Some regulations and regulatory bodies are good and necessary. But when the Code of Federal Regulations has grown to 175,000 pages, and the small state of Delaware’s regulatory body alone includes 104,562 restrictions and would take 9 weeks to read in its entirety.

In normal times, state and federal government should examine their regulatory body and ask businesses for their perspective. Businesses are beholden to a high standard anyways if they want to keep customers, and too many regulations make it near impossible to make clear their margins, hire workers, or even get started in the first place.

Now, as we recover from the impact COVID-19 has had on our businesses, workers, and economy, our legislators must seriously consider the impact their policy decisions will have on rebuilding what was lost in 2020. In many cases, reducing and eliminating  current regulations that are job killers could help some small businesses endure the crisis. The recovery of small businesses and jobs will spawn economic growth and a healthy job market.

Below is a list of some examples of just the regulatory bodies that have an impact on this massive regulatory burden on businesses. Keep in mind that this is not a comprehensive list, and that every entity on the list issues and enforces their own regulations. Each one is another weight on the shoulders of entrepreneurs and business owners, and not all are necessary to ensure a safe and productive market. This does not include county and city regulations that are enacted in addition to those put forth by these entities.

Federal:

  • Federal Trade Commission (FTC)
  • Environmental Protection Agency (EPA)
  • Occupational Safety and Health Administration (OSHA)
  • National Institute for Occupational Safety and Health (NIOSH)
  • Internal Revenue Service
  • Social Security Administration
  • Defense Department
  • Centers for Medicare and Medicaid Services
  • Federal Energy Regulatory Commission
  • Consumer Product Safety Commission (CPSC)
  • Equal Employment Opportunity Commission (EEOC)
  • Federal Aviation Administration (FAA)
  • Federal Communications Commission (FCC)
  • Federal Deposit Insurance Corporation (FDIC)
  • Federal Reserve System (the FED)
  • Food and Drug Administration (FDA)
  • Interstate Commerce Commission (ICC)
  • National Labor Relations Board (NLRB)
  • Nuclear Regulatory Commission (NRC)
  • Securities and Exchange Commission (SEC)
  • Fair Labor Standards Act (FLSA)
  • The Employee Retirement Income Security Act (ERISA)

Delaware:

  • State Insurance Commissioner
  • State Bank Commissioner
  • Public Service Commission
  • Department of Labor (DOL)
  • Department of Natural Resources and Environmental Control (DNREC)
  • Safety and Homeland Security
    • Alcohol Beverage Control Commission
    • Office of Highway Safety
  • Merit Employee Relations Board
  • Public Employment Relations Board
  • Agricultural Lands Preservation Foundation
  • Food Product Inspection
  • Forest Service
  • Harness Racing Commission
  • Thoroughbred Racing Commission
  • Cash Management Policy Board
  • Delaware Health Care Commission
  • Delaware Manufactured Home Relocation Authority
  • Board of Manufactured Homes Installation
  • Delaware River Basin Commission
  • Delaware Solid Waste Authority
  • Professional Standards Board
  • Delaware Economic Development Authority
  • Division of Public Health
  • Fraud and Consumer Protection Division
  • Board of Cosmetology and Barbering
  • Human Relations Commission
  • State Fire Prevention Commission
  • Division of Motor Vehicles
  • Various professional boards

Pro-worker mandates actually hurt workers

All policy—economic or social, conservative or liberal—has unintended consequences. Good policy would minimize the negative effects of the measure while best targeting the problem that is being addressed. When it comes to business-related legislation, we are far from good policy.

Take employer mandates like paid family leave and increased minimum wage for example. Both efforts seek to tackle an issue head on, and are branded as “pro-worker” legislation. In an isolated bubble, this may be true. However, in the real world, pro-worker measures inflict more damage than that they seek to heal.

If paid family leave looks to provide a better work life balance and support to families, then why is it ignored that the current proposals would result in smaller wages, layoffs, or impact social security? These side effects are pretty harmful to workers and their families as well.

Look at minimum wage. The entire argument in support of $15 per hour is based on the need for a livable wage for these workers. But what happens when their employer cannot afford the cost increase, and cannot raise their prices high enough to make up for it? Instead of a $15 hourly wage, many workers will be left with no hourly wage when they are laid off to accommodate the mandate. Zero dollars is certainly not a livable wage.

Video: What’s Killing the American Dream? from PragerU

Legislation and regulations that are anti-business are blatantly anti-worker and anti-jobs.

Small businesses are vastly important to the American and Delaware economy. Such critical establishments should be supported by their representatives, but unfortunately are not. In fact, it’s the opposite. Government regulation is killing small businesses—and killing the jobs they create as well.

Putting social goals over profits is misleading. Traditional profit-seeking entrepreneurship has benefits that span community, socio-economic status, race, and gender. Suppressing these profits will in turn suppress the benefits they provide to overall society.

Increases in regulatory restrictions are associated with declines in lower- and middle-skilled jobs, lower wages, reduced hours, layoffs. None of those things are pro-worker.

In a better informed government that weighed the consequences of feel good legislation, lawmakers would work across the aisle to support bills that actually promote job growth, support businesses, and strengthen the economy. This new approach would mean that our elected officials work for the people, instead of duping them.

The next time you hear a lawmaker, party representative, colleague, or friend denounce a pro-business policy for being anti-worker or for putting business over the people, consider how a business can support its workers when their operations take a hit, and why both sides can’t align on this issue.

Killing jobs and cutting wages does not help workers

If Delaware wants to understand the ramifications of various employer mandates featured on many platforms this election season, they can look north to Connecticut. Connecticut’s proposed bills in 2018 included family and medical leave, expanded paid sick leave, and minimum wage hikes. The implementation and compliance costs of these mandates to taxpayers and businesses were estimated to be up to $530 million.

Connecticut Business and Industry Association President and CEO Joe Brennan expressed concern that long term talks about the difficulty of having one-size-fits-all mandates on employers applied to these bills as well. Added costs and administrative burdens expected to accompany these and similar measures are bad news for an economy as businesses will be forced to lower wages or cut jobs entirely.

You hear people ask, “Why not mandate that employers can’t do these harmful things?” Unfortunately, these things cost money that has to come from somewhere. Businesses are experts in finding ways to be able to stay afloat and keep their doors open and will have no option but to make cuts if saddled with these costs.

Connecticut’s paid leave benefits were set to be funded by mandatory deductions from employee wages, exchanging income for benefits. On top of this, taxpayers would fork over $18.6 million annually to administer these plans. The costs impact more than just the employees and tax payers: businesses’ bottom lines will be impacted, especially for companies that are operating on very small profit margins, like small businesses.

So what can businesses do?

The easy answer is to cut wages or cut jobs to make up the additional costs. Automation is rapidly expanding in the business world, and is a cheaper option in the long term to having increasingly expensive, and often unreliable, human labor. Robots could occupy 38% of jobs in the U.S. economy by 2030, and boost productivity, manage labor costs and improve operational predictability for large and small businesses. Small businesses like transportation and storage, manufacturing, retail and other industries, are the most likely to adopt these changes in the near-term. They’re also the ones who will be hardest hit by the proposed employer mandates.

In addition to or to avoid layoffs or automation, businesses could also raise prices to pass the cost onto the consumer. In this instance, the business still faces higher costs, but now the tax payer is paying twice to fund these mandates. If the costs become too high and sales suffer, layoffs are back on the table.

You can’t force a company to hire associates but you can certainly force them out of a burdensome state or country they can no longer afford to operate in—and they’ll take their jobs with them.

When our workers, small businesses, and overall economy are already struggling to get back on their feet after COVID, anything that could provide such widespread damage should be off the table. The 2021 Legislative Session should focus on helping Delaware workers and businesses, not forcing them into unemployment and bankruptcy. This election will determine if our workers and businesses can recover, or if costly and burdensome mandates will cause more job loss and small business struggle. Delawareans must make the best choice for the future this November.