IINTERVIEWED two plumbing-company owners in Pittsburgh recently about Barack Obama's economic proposals for small businesses. One has 15 workers and 12 trucks, the other 52 and 34 trucks.
It's Joe the Plumber, writ large.
Both had the same reaction to Obama's proposed new taxes and mandates. To not have their bottom lines reduced by government fiat, both said they'd be forced to lay off employees.
Specifically, here's what the owner of the larger firm said regarding six of Obama's key proposals for the small-business sector. The average wage at his company, figuring the 52 paychecks of his office staff, installers and service workers, is $31,200, or $15 an hour.
First, "Barack Obama and Joe Biden will require that employers provide seven paid sick days per year," the Obama campaign Web site says. "I give three paid sick days," the owner said. His extra cost for this one new regulation would be $24,960 (4 extra days, 52 employees, an average of $120 a day). "I can make up that cost by letting one of the office people go."
Second, Obama says employers will be required to pay 100 percent of the cost of health insurance premiums for 100 percent of their employees or face a tax penalty.
"I pay 75% of their coverage," the owner said. "The family policy is about $11,000. For single guys, it's about $5,000." At an average annual cost of $7,000 per policy, his additional cost for 52 employees to cover the 25 percent of the premiums he currently doesn't pay is $91,000.
"That's the price of three installers," he said. "Just to stay even . . . I'd have to fire three more people, or raise some prices and fire two."
The result: more unemployment or more inflation, or both.
Third, with the estate tax, Obama is calling for a top tax rate of 45 percent on estates above $3.5 million, producing an estimated "death tax" of $675,000 on an estate of $5 million.
"You're kidding," he said. "They took half my income on the way up and now they want another half when I die?" He estimated that his business is already valued at over $3 million, in addition to the value of his home and investments. "Why," he asked, "would I want to grow to 100 employees? What'll stop them from changing it to 75 percent?"
The cost in jobs that will never be created in the U.S. economy because of this single disincentive to growth? Incalculable.
Fourth, Obama's economic plan calls for a hike in the minimum wage to $9.50 an hour within three years. The business owner's reaction? "That's bad for two reasons. I don't have anyone at minimum, but raise the bottom by $3 and a guy making $15 wants $18. Plus it's bad for productivity when people think their pay raises are coming from government instead of from their own individual effort."
Fifth, saying he'll "play offense for organized labor," Obama is proposing that workers should be denied the right to a private ballot at work in deciding whether or not to unionize. "That'll never be," said the plumbing entrepreneur. "I'm in business because I'm independent, not to take orders from a grievance chairman. I'd shut down."
SIXTH, the increase in taxes on this businessman from Obama's proposed hike in the income tax from 36 to 39.8 percent on incomes above $200,000 and the proposed increase in Social Security taxes comes to $32,000 a year.
"That's another employee" who'll have to go, he said. And the jobless plumbers? Maybe they can be retrained to work for ACORN.
As Obama explained in July: "We cannot continue to rely on our military to achieve the national security objectives we've set. We've got to have a civilian national security force that's just as powerful, just as strong, just as well-funded."
As "well-funded" as our armed forces personnel comes to $119 billion a year in paychecks for "community activism," a lot of money for registering dead voters, caulking windows and monitoring the airways to make sure conservatives don't have too many talk shows.
Bottom line: Obama's economic plan doesn't hold water. Neither will our pipes. *
Ralph R. Reiland is an associate professor of economics at Robert Morris University, a restaurateur and a columnist at the Pittsburgh Tribune-Review.