Small firms hit hard when reserves are mobilized

A funeral home operator in Bangor knows first-hand about the problems small businesses can face when the people who work for them are called up for lengthy deployments with the National Guard and reserves.

Larry Audet, a longtime member of the Army National Guard, was sent to Afghanistan in 2003, forcing him to hire temporary workers to help his son run the Greenlawn Memorial Funeral Home.

“I was one of the fortunate ones,” said Audet, 58. “But if I hadn’t had my son in the business, I don’t know what I would have done.”

Congress has begun to take notice of the problem. A Congressional Budget Office report released Wednesday said small businesses often suffer lower profits and have problems adjusting to vacancies when military reservists are called to duty.

“I think what we need to do is find a way to reduce the hardships,” said Sen. Olympia Snowe, R-Maine, who requested the study as chairman of the Small Business Committee. “Obviously when you’ve got a small business, you don’t want them to shut down.”

The report found that 35 percent of Guard and reserve members work for small businesses or are self-employed, while 26 percent work for large businesses and 36 percent for government.

Because 98 percent of businesses in Maine are small, deployments can hit hard.

“We have to find a way to work with these companies,” said Snowe, who is pushing legislation to help ease the burden.

Reserve call-ups have increased sharply since the terrorist attacks of Sept. 11, 2001. The Pentagon called up 410,000 reservists between September 2001 and November 2004.

One-third of the troops deployed in Iraq and Afghanistan in November 2004 were reservists. At one point last year half of Maine’s 2,200 Army National Guard troops were deployed overseas ? one of the highest percentages of Guard soldiers on active duty in the nation.

Adding to the problems are a lack of advance warning about mobilizations and uncertainty about how long the workers will be gone.

“The current trend toward longer and more frequent reserve deployments … raises questions about the ability of civilian employers, particularly small businesses, to absorb the costs they experience when their reservist employees are called up,” Douglas Holtz-Eakin, the CBO director, wrote in the 31-page report.

Options to reduce the effects of deployments include: compensating businesses with payments or tax credits, subsidized loans, subsidized insurance or exempting certain workers from call-ups.