In the 15 years I have been lobbying it always seems Illinois, California, Pennsylvania and New York are the “test cases” for liberal policy. The center left groups tend to use our states as incubators, trial balloons and the “let’s throw it against the wall and see if it sticks” mentality.
The latest is the idea to mandate business owners with more than 10 employees, who don’t already have a retirement plan for their workers, to enroll those employees in Individual Retirement Accounts. The state would set up an administrative fund to take in those retirement dollars, invest them (or hire someone to do it) and manage the program.
Yes, let’s give the state yet another chance to take money and make it magically disappear. Can you say “College Illinois” or how about “state employee pension disaster?” Why on earth would we want to subject private sector workers to this same mismanagement?
Evidently those who are worried that Americans aren’t saving enough for retirement believe government is, yet again, the answer.
SB 2400 (Sen. Daniel Biss) and HB 2461 (Rep. Deb Mell) both target the private sector and force them to not only set up IRAs but also automatically deduct at least 3% from their employees’ paychecks. An employee would have to actively pursue “opting out” if they did not want to participate. You see, small businesses already have a variety of private sector options they may choose to participate in for retirement purposes. If they choose not to participate that should be their prerogative – it is their business, their workplace. If an employee wants to set up a retirement account they too have access to many financial institutions who would be happy to sell them a product.
The proponents argue that by allowing businesses to pool together under a state-guided plan it will be less costly. That may be true, but isn’t it a bit unfair to ask all of those currently in the marketplace selling these products to now compete on an unfair playing field against the government?
Also, what happens when the worker’s investments go down, as the market tends to do now and then? Will the employer, who doesn’t want to offer the IRA in the first place, bear the brunt of their unhappiness causing added friction in the workplace? Will there be a state-run hotline for these angry investors to call? And if yes, will a real person actually answer the phone? Will anyone answer the phone?
The proponents also argue this is the least intrusive way to get these workers to start saving. That the employer simply must enroll the worker and start the payroll deduction and after that their obligations are fulfilled. The problem is that this isn’t the only mandate, additional paperwork or regulation that businesses have to comply with. This idea comes at a time when business owners are being deluged with complex paperwork with Obamacare and the SMART Act. Business owners are buried in state and federal paperwork, all of which come with fines and penalties if the employer makes a mistake.
So NFIB, along with many other business entities, will fight this mandate vigorously and send a message to the “government is the answer” crowd that this “test” fails miserably.