Obamacare's War on Full-Time Jobs Will Sucker Punch Economy

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Obamacare's rules regarding hours worked and employer-sponsored healthcare coverage have entire industries looking at cutting down on their number of full-time employees in favor of more part-time employees.

Large industries affected include hotels, restaurants and retailers, as well as small businesses of all stripes.

In essence, the hefty financial burden imposed by Obamacare for having too many full-time employees is creating a huge incentive for many employers to cut workers' hours, or, in some cases, avoid hiring altogether.

Tens of millions of American workers are at risk of being denied employer-sponsored health insurance as a result, and will end up with less pay to boot.

It could be a disaster for the still-lagging U.S. economy.

"If you want to have reduced work, lower wages and economic stagnation, this is a great way to do it," Ed Haislmaier, a senior research fellow at the Heritage Foundation, told FOX News.

How Obamacare Discourages Full-Time Jobs

In trying to achieve the goal of having health insurance for all Americans, Obamacare – officially known as the Affordable Care Act – created specific requirements for employers.

The Obamacare law says that every employer that has 50 or more full-time employees must offer health insurance to anyone who qualifies as full-time, defined as anyone who works at least 30 hours a week.

A $2,000 a year penalty for not offering health insurance kicks in for small businesses when they hire their 50th employee, but the penalty extends beyond employee No. 50.

That one additional employee triggers a $2,000 a year penalty on every employee above the threshold of 30. So the penalty becomes $2,000 x 20 instead of $2,000 x 1 – the net result being a $40,000 a year penalty.

Of course, every hire after that incurs another $2,000 a year, so adding more full-time employees without offering a health insurance plan can quickly get very expensive.

Yet offering health insurance would be even more costly, so it's easy to see why many businesses are worried.

Franchise industries (like fast-food and restaurant chains) and other small businesses often operate on thin profit margins – the net profit averages 3.5 %.

That's why such businesses have rarely offered healthcare benefits in the first place. They'll do whatever it takes to stay beneath the Obamacare thresholds.

"Many stores will have to cut worker hours out of necessity. It could be the difference between staying in business or going out of business," Stephen Caldeira, president of the International Franchise Association, told The Wall Street Journal.

Obamacare could cost the franchise industry $6.4 billion and put 3.2 million jobs at risk, according to a study done in 2011 by the Hudson Institute.

Meet Obamacare's "49ers" and "29ers"

Many smaller companies have already started to limit hiring to 49 employees to avoid the Obamacare triggers, earning the nickname "49ers."

Meanwhile, service-oriented businesses are seeking to keep work weeks below 30 hours – the "29ers" – because they don't have to offer health insurance to part-time workers.

According to The Wall Street Journal, franchisees of Burger King, McDonald's, Red Lobster, KFC, Dunkin' Donuts and Taco Bell have all started to nudge employees into part-time hours.

They can't afford to wait until the law goes into effect Jan. 1 because Obamacare will base the status of employees on their work schedule in 2013.

Just this week, Regal Entertainment Group, which operates 500 movie houses in 38 states, said it has cut the schedule of thousands of employees to less than 30 hours a week. A company memo blamed the move on Obamacare.

Even some states have shifted their employment policies in response to the Obamacare requirements.

Earlier this year, Virginia Gov. Bob McDonnell told state agencies to reduce hours worked by part-time employees to less than 30 to avoid an estimated increase in annual health insurance costs to the state of $61 million to $110 million.

Lost Pay Will Damage U.S. Economy

The biggest losers here, of course, are the millions of workers affected by these changes.

Their reduced hours will ensure that not only will they be denied employee-sponsored health insurance, they'll also be forced by law to buy health insurance from an Obamacare exchange or face financial penalties themselves.

Worst of all, the reduced hours will mean less pay.

The last thing workers making less-than-average wages need is a pay cut.

Equally concerning is the Obamacare-generated bias toward part-time workers, which we're already seeing.

According to Gallup, part-time jobs have risen from 17.6% of the labor force last July to 20.6% in February. That's an ominous trend.

A rising proportion of part-time workers making less money will put a new drag on the U.S. economy, 70% of which is driven by consumer spending.

When you add in the number of jobs that won't be created because of companies trying to stay below the 50-employee threshold, it's clear that Obamacare is going to be a hard pill for American workers to swallow.

"Democrats who thought they were doing workers a favor by mandating health coverage can't seem to understand that it doesn't help workers to give them healthcare if they can't get a full-time job that pays the rest of their bills," The Wall Street Journal observed in a recent editorial.

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Join the conversation. Click here to jump to comments…

  1. Gary | April 19, 2013

    I agree with the article. the State of Hawaii has for the last 20 years, or more, mandated State wide health insurance for any employee who worked over 20 hours a week for more than 5 weeks in succession. Employers had to pay 90% of the premiums. Well, guess what ? employees would work 20+/- hours for 4 weeks and only 19 hours for the last week. That is why so many of the residents have to work 2 and 3 different jobs to make a decent living

  2. John | April 20, 2013

    Another example of an employer cutting part-time hours with minimal notice to its employees. Cabellas a retailer specializing in outdoor gear posted the following at the time clocks this past week. — As part of healhcare reform (PPACA), the definition of part-time employment is changing to less than an average of 30 hours per week measured over a specified time period. For Cabella's, that time peroiod is 12 months. As a result of this change, effective on the next posted schedule part-time hours will be scheduled at a max of 28 hours based on employee availability.

  3. Tammy | April 20, 2013

    My Mom works for a grocery store in St. Francis, MN. She has always been able to work over 30 hours a week and be able to earn enough to support herself. Since the store decided to take action because of the new rules going into effect, she has been cut down to 28-29 hours a week and her Sunday hours now count toward the total hours for the week (they never used to count). She receives health care from her work and is on Medicare but the reduction of hours has hurt her tremendously. She is 71 years old and should not have to worry about being able to work enough to pay her bills. The idea behind the bill was a good idea but too many people are being hurt by the impact of it. Before it gets worse Congress needs to reconsider their actions and make a positive change to how businesses as penalized if they have 50 or more fulltime employees. This is not a good system.

  4. Attila | April 21, 2013

    Of course the costs always eventually pass on to the consumers. Companies would be ill serving their owners/stockholders if they fail to do so. Those who vote for pandering politicians never get it.

  5. Faith La Riviere | April 21, 2013

    This was predictable by anyone who knows anything about business and this president is clueless.

  6. Norman Risner | April 22, 2013

    Seems to me Obamacare is going to cause medical premiums to double and americans will not be able to get health insurance at their job. Bottom line…we are screwed…hope you morons who voted for Obama are happy….hahaha….suckers!!!

  7. SteveM | April 22, 2013

    Very convienent to blame The Affordable health care act for cutting back employees, profits soar, the employes get hurt.
    These employers should have been providing some type of health insuance in the past. Maybe it would cost .25 cents more to see a movie. Wow, big deal for the general public.
    Also, companies have been doing this for years, object to avoid other benefits for part time employees this is just their chance to blame the government. Where is the criticism of Walmart?

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