07/10/2007
CONTACT: John Kabateck or Michael Shaw, 916-448-9904
Research shows Small Businesses will be forced to slash jobs
SACRAMENTO, Calif. -- A study released today shows the loss of nearly a quarter of a million jobs in California should Assembly Bill 8 become law. The Senate Health Committee is expected to announce its approval of AB 8 tomorrow. The bill includes a 7.5 percent payroll tax on California small businesses, which the study -- released by the National Federation of Independent Business, the state and nation's leading small-business advocacy group -- says will result in the loss of 249,000 jobs as a consequence of the tax.
California Assembly Bill 8, authored by Assembly Speaker Núñez, has an estimated minimum price tag for California employers of $8.3 billion and will force businesses across the state to cut jobs. The new regulations will add a payroll tax on 80 percent of California employers. With the cost so high, it's no wonder that small businesses (less than 500 employees) stand to lose the most workers.
John Kabateck, executive director of NFIB/California, urged the Legislature to take a look at the complete study. "This study should alarm everyone about the consequences of a 7.5 percent payroll tax," said Kabateck. "California can't afford to lose 249,000 jobs. Our members will be slammed hard. The Legislature needs to understand what damage it could do to the engine of the California economy. When small firms get hit with cost increases, they cannot automatically increase prices to make up the difference."
In addition to losing 249,000 jobs within five years of AB 8 being enacted, California businesses stand to lose $67 billion in sales during the same time period. Again, small businesses bear the brunt of the loss, with retail, trade and construction firms being the most adversely affected.
Janine Montoya, co-owner of Tri-County Heating, Air Conditioning and Fireplaces in Newbury Park, said, "I'm a proud business owner who works hard to provide for my employees. A 7.5 percent payroll tax will punish my business, and I will have to make the difficult decision to downsize by eliminating part-time, college-age employees who we apprentice by the dozens."
NFIB's Research Foundation, based in Washington, D.C., studied the economic and small-business effects of AB 8. The study analyzes the results of an input-output system that produces short- and long-term forecasts for detailed industry sectors when external shocks are applied. It estimates future changes in jobs, output (sales), income and productivity for California by business size and industry. Estimates are made by comparing forecasts without change to forecasts with change -- in this case, the proposed legislation.
