To fight Goliath, David-sized businesses need help on retirement plans

The Hill

Now that National Small Business Week is here, lots of lawmakers will be telling us about the importance of fighting for the interests of America’s job creators. It is hard to take some of those claims seriously, however, since politicians in Washington, D.C. are close to killing a federal rule that makes it easier for states to establish retirement savings plans that benefit small businesses.

During the Obama administration, the U.S. Department of Labor gave more options to small businesses that don’t offer retirement programs by permitting states to create a public/private partnership that allows private-sector employees to contribute to an individual retirement savings account through modest payroll deductions. This is critical for small businesses that often lack the resources to offer these retirement savings options themselves.

Small business owners back benefits like retirement plans because they make for a happier staff, which in turn can lead to increased productivity and greater profits. Policies like these also help level the playing field between small businesses that want to offer retirement benefits but can’t and their larger counterparts that can. This helps small businesses compete for the best employees and gives employers peace of mind that they are doing what’s best for their workers.

California, Illinois and Oregon are in the process of implementing these type of programs already. In Colorado, lawmakers considered legislation this session that would have created this sort of program, but it failed to pass despite support from the small-business community.

In fact, recent scientific opinion polling released by Small Business Majority and AARP Colorado found almost three out of five small business owners in Colorado support a privately-managed state retirement savings program that would help small businesses offer employees a way to save for the future. Nearly seven in 10 believe offering such a program makes small businesses more competitive by helping them attract and retain talented employees.

If the federal rule is struck down, it will have a chilling effect on state programs that are just now getting off the ground. Unfortunately, Congress has already begun chipping away at these public/private retirement programs; the U.S. House of Representatives and Senate already voted to strike down a Department of Labor rule that makes it easier for local governments to establish publicly administered retirement savings programs. That resolution, HJR 67, now awaits President Trump’s signature.

What’s more, the House voted to end the retirement savings account rule for states as well when it approved HJR 66. Its fate in the Senate is uncertain, but if lawmakers kill the retirement savings plan rule, it will hurt small business owners like Everett Schneider.

Everett is president of Bedrock Landscaping Materials in Denver, and he supports the creation of state-managed individual retirement accounts for private-sector workers. Everett’s business is unable to offer a retirement savings program right now, making it harder for him to compete in a crowded marketplace when searching for potential employees — especially those who would serve in management roles.

Everett would really like to offer a retirement savings plan; he feels he can’t, however, because he doesn’t have the resources. He says the main barrier to providing this benefit is the cost of managing the program and the time it would require of a benefits/human resources person. Like a lot of small firms, his business is simply too small to have an employee who could fill this type of role. As it is, Everett takes on many of the necessary HR tasks himself.

Small firms need a retirement savings program for their employees that is both affordable and reliably managed by someone else. Without an option for state-administered programs, America’s entrepreneurs will continue to struggle to compete for and to retain talented employees.

Lawmakers regularly say they want to help small businesses. Now they have a chance to do just that by protecting a federal rule that helps small businesses by boosting their bottom line and leveling the playing field. All they have to do is vote no on HJR 66.

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