We often criticize Barack Obama for never having run a business and not knowing anything about it. But maybe we’re missing something. Obama apparently believes he knows how to run every business in America that wants to be a federal contractor, because he is very fond of telling them how they have to run their companies as a condition for getting federal contracts
Oh, and by the way, these actions usually mean taxpayers will pay more and get less in federal contracting arrangements.
The latest example is a new executive order through which Obama requires that any company seeking a federal contract must offer employees up to seven paid sick days per year. If you dock employees pay when they’re out sick, or you offer to pay for fewer than seven sick days, sorry, you can’t get a federal contract.
Now many of you might wonder what’s wrong with this, since we tend to think that good employers would be generous and offer to pay for sick days anyway. And sure, you can make an argument that this is a good employment practice, although you can certainly debate the basic premise in addition to debating just how many days are reasonable to pay for. In fact, many employers offer more than this, because they base it on when people are actually sick.
But all this misses the larger point. Employers and employees can work out their own terms. They don’t need a client – whether it’s General Electric or the federal government – telling them what these terms must be.
Even more importantly, though, imposing a requirement like this goes against all good practices of contracting.
If you’re going to contract out work, you want to make sure that your contractor’s cost structure is not too heavy. That’s one way you can be confident they can charge you reasonable fees instead of excessive ones. If the contractor’s cost of labor is higher than it needs to be, it has to make up those costs somewhere. One way they might do so is inflate client fees.
By requiring contractors to pay for a certain number of sick days, Obama actually inflates their labor costs beyond what they need to be. So rather than doing what a smart client would do, which would be to make sure the vendor’s costs are as low as possible, Obama is actually pressuring them to raise their costs. Not only that, but when paid sick days become a federal mandate, it encourages abuse like most government mandates.
Who do you think is going to pay for that? If federal contracts represent a major part of their business, then it’s the U.S. taxpayers who are going to pay for that contractor’s employees to not work.
By the way, this is yet another reason to oppose the expansion of the federal government. When Washington has its hands in everything, and companies can scarcely grow without federal contracts, it puts Obama in a position to dictate how everyone does business by shutting them out of the federal contracting game if they don’t do things his way.
Not good. Employers know what they’re doing. Obama does not.
If you want to be paid for sick days, go ask your boss. Maybe you can negotiate that benefit in exchange for something the boss wants you to do. Or maybe your boss sees you as so valuable that he’ll gladly just say yes. But when a politician imposes it on your company, it’s no good for you or the company. If you’re the employee, you just became more expensive and harder to get value out of – unless, of course, you stay healthy and show up for work every day.
But if you do that, thanks to Obama, your colleagues who are out sick are getting paid the same as you. I wonder how long any business would last if Obama was actually its CEO. With policies like these, not long.
