Congress shouldn't retire a rule that will help California small businesses save for the future

The Senate is expected to vote as early as this week to overturn a Department of Labor rule that makes it easier for states to establish retirement savings plans, like the Secure Choice Retirement Savings Program being implemented here in California. Striking down this rule would have a chilling effect on California’s Secure Choice Program, and would be especially harmful to small businesses and their employees who are looking forward to taking advantage of this program.

The U.S. currently suffers from a retirement savings gap of more than $6 trillion, and more than 38 million households do not have any retirement savings at all.

This lack of retirement savings disproportionately affects those who are employed by small businesses, which is important because small businesses employ about half of all private sector workers. In fact, eighty percent of workers employed by businesses with fewer than 25 employees do not have any sort of pension or retirement plan at all.

Many small employers want to offer retirement benefits to their employees, but they face several barriers to doing so, including lack of administrative capacity to manage such a program, not being able to afford to offer one and more. Most small businesses are simply too small to have an employee who could fill this type of role; many small business owners take on the necessary HR tasks themselves, which adds to their already heavy workload. That’s why having a program that is reliably managed by someone else is critically important for small businesses that do not have the time, financial resources, expertise or staff to take on a retirement benefits program.

What’s more, state retirement savings programs can help level the playing field for small employers against larger firms that can afford to offer these benefits. Managing employee turnover is a major challenge for small business owners, but savings programs can help promote employee retention by providing staff with a sense of security. After all, employees who feel secure tend to stick around. This also helps small businesses compete for the best employees, and gives employers peace of mind that they are doing what’s best for their workers.

California’s Secure Choice Program will provide an easy and affordable option for small businesses, which is why they strongly support it. In fact, polling from Small Business Majority and AARP found nearly two-thirds of California small business owners support state legislation that would make it easier for self-employed individuals and small businesses to establish a basic retirement savings option. Additionally, nearly three-fourths of respondents think offering such a program would give their business a competitive edge.

As these numbers show, small businesses and their employees need more resources to save for the future. This is why we believe it should be up to the states to decide whether to implement these types of retirement programs, and how best to administer them in order to serve their small business community. We implore the Senate to uphold the Labor Department’s rule, and to consider how these programs can help small businesses and employees struggling to save for retirement.