My Point of View: State’s businesses can’t afford to get this one wrong

Published 8:45 pm Tuesday, February 14, 2023

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My Point of View by Robert Hoffman

Minnesota’s 10,000 lakes could soon be outnumbered by its proposed progressive programs of more and more handouts. Neighboring states offer a business-friendly climate and haven’t seen their governors allow neighborhoods full of businesses to burn to the ground. Now, another fire is being lit under the feet of Minnesota’s employers and could prove to be more widespread and, believe it or not, even more damaging. This will quickly reach the business owners of Freeborn County and southern Minnesota. Minnesota needs to support its businesses by getting out of small businesses’ business.

Robert Hoffman

The Minnesota Legislature is currently considering two sets of bills, HF2 and SF2, that would require all employers to provide paid medical and family leave up to a combined 24 weeks per year for all employees. While these bills may sound positive on the surface, the reality is they are poorly thought through and would lead to significant unintended consequences for both employers and employees.

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What is being proposed?

• The two types of leave, paid family leave and paid medical leave, will be required to be available to employees for up to 12 weeks each year. These can be combined for a total of 24 weeks paid leave per year, which equals nearly half of each year.

• Employees’ jobs must be held for them during their leave.

• Employees will be paid a partial wage replacement by the state during their leave.

• A new 300 to 400 government employee bureaucracy will be formed to run the program.

• A new 0.7% payroll tax will be charged to all employers to fund the program. Employers can choose to pass on half of this cost onto their employees.

• These requirements will apply to every employer regardless of size, or capability to cover positions that are left vacant. This will include our farmers and local government entities.

If passed as is, HS2 and SF2 will harm both Minnesota businesses, particularly small businesses, as well as Minnesota employees, the very people it claims to protect. A little life experience combined with foresight tells us the following:

Increased payroll costs would eat into the dollars available for employee wages, making it even more challenging for wages to keep up with high inflation costs. Why are we even considering raising taxes further when we currently have an $18 billion surplus?

Instead of encouraging local growth, businesses would instead be incentivized to reduce their number of employees, to automate and to outsource.

Our locally owned small businesses, which were especially stressed by our state’s COVID lockdown policies, will be pushed closer to the brink of shutting down permanently, leaving us increasingly dependent on larger corporate monopolies. We’re already seeing worker shortages, now this would allow employees to be away from their jobs for up to 24 weeks each year. If a business of 5 to 10 people loses a key employee for several months, the burden of holding that position is dramatically larger than for an employer of 200.

Not only would businesses and family farms be affected, but government entities such as school districts, cities and counties would see their employment costs and vacancies increase as well, resulting in their need to either reduce services or raise taxes.

Communities near bordering states would be disproportionately suppressed. Will businesses choose to move to or start in Freeborn County if they could simply locate a few miles south to Iowa and operate in a much more hospitable climate?

The idea that the self-employed or small business owners, themselves, would also be able to use the paid time off is laughable to anyone with experience in these areas. If the work doesn’t get done and the bills don’t get paid, there is no business to come back to.

We need to ensure our citizens have opportunities to find good jobs and also have the ability to create good jobs, themselves. Common sense alternatives to HF2 and SF2 exist and should be pursued. We’re fortunate to have Rep. Peggy Bennett, who has co-authored a competing bill that would offer tax credit incentives for employers who provide paid leave for employees, but allows businesses to structure benefits in ways that work best for their individual situations and employees. One size does not fit all.

This is an issue that very much affects us in Freeborn County and southern Minnesota, especially if we don’t take this seriously and just trust it in the hands of the out of touch legislators proposing such bills. We are blessed to have our levelheaded state Rep. Peggy Bennett and hope there are enough state leaders as sensible as she is who will also keep Minnesota’s small business owners in mind. Iowa and South Dakota are too close to relocate businesses to for Minnesota to get this one wrong also.

Robert Hoffman is the chairman of the Freeborn County GOP Party.