Chairman Harr and Members of the Business and Labor Committee:
On behalf of the more than 1,300 business members of the Lincoln Independent Business Association, I appear today in opposition to LB 850, which establishes a Paid Family and Medical Leave Insurance program. While we understand that Senator Crawford’s proposal in its current form does not place direct costs on businesses by way of monetary contributions to this insurance pool, we offer our opposition in light of the indirect costs and practical burdens this legislation will place on many Nebraska businesses. Specifically, we raise concerns about the impact this legislation will have on the ability of small and mid-sized businesses to succeed.
According to the Nebraska Department of Labor, approximately 90% of Nebraska employers have between 0 and 19 employees.[i] In 2012, the largest gains in net new job creation came from businesses employing between 1 and 4 employees.[ii] In 2013, 5,247 business establishments opened in Nebraska, but more than 20% of those establishments failed to survive to 2014.[iii] In a state like Nebraska, with a blend of both rural and urban economies, small businesses and entrepreneurship sustain so much of what we have to offer in terms of employment opportunities and community amenities. As goes the success of small business, so often goes the success of our communities.
With nine out of ten Nebraska businesses employing fewer than 20 employees, the strain LB 850 will place on their success is evident. Consider this: An employer opens a small business, growing to eight employees. Less than a year and a half after opening, an employee of the company with specific technical skills takes eight or twelve weeks of family leave under the proposed program, leaving the business with no one capable of handling the employee’s duties. The new and growing business faces a considerable problem – the work of the skilled employee cannot be completed without quickly replacing the employee, but the business must also reserve the employee’s position for she or he to return following a two or three month leave of absence. While it may seem as simple as hiring a temporary replacement, there are many times when temporary workers cannot meet the needs of employers, especially when they require special skills, and it becomes doubly complicated in that many skilled employees are not looking for temporary positions. Add in the fact that the business must take time and effort to train a replacement, and the seriousness of the situation presented becomes clear. Some may dismiss the hypothetical presented as being uncommon, or as being over wrought to the point of being little more than an excuse. But it is the big questions like this and how they end up being handled that make or break a small business trying its best to take care of its employees and customers, all the while focused on growing its efforts to the betterment of the business and the local economy.
It should be made clear that LIBA and its members understand the predicament faced by employees handling family matters. Many employers currently offer leave programs to their employees, and a growing number are adding such programs or are seriously considering them. But the businesses that provide these programs have chosen to do so because they have determined that they have the capacity to handle the temporary loss of an employee. Allowing businesses to make the choice that is best for them and their employees is the best way to protect Nebraska small businesses and ensure their success.
For these reasons, we ask the committee not to approve LB 850.
[i] Nebraska Department of Labor, Office of Labor Market information, Quarterly Census of Employment & Wages (January 27, 2016)
[ii] Small Business Profile: Nebraska. U.S. Small Business Administration (2015), available online at https://www.sba.gov/sites/default/files/advocacy/NE_1.pdf.