June 25 2013
ObamaCare Update: Chickens Coming Home to Roost
This is a tale of two different economic projections.
First, there's that new Gallup poll of small business owners across the country bears out what economists and policy analysts have been predicting: Mandated healthcare by the federal government is having an adverse effect because businesses are reluctant to hire new workers.
Here are some of Gallup's startling results:
- 41 percent of the businesses surveyed have frozen hiring and 19 percent said they cut back on the number of employees because of the healthcare law.
- 38 percent of the small business owners said they "have pulled back on their plans to grow their business".
- 24 percent are weighing whether to drop insurance coverage, while 18 percent have "reduced the hours of employees to part-time" in anticipation of the law’s effects.
A representative for the employment law form that commissioned the Gallup poll commented:
"We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn't realize the extent they were concerned, or that the businesses were being proactive to make sure the effects of the ACA actually were minimized… If the small businesses' fears are reasonable, then it could mean that the small business sector grows slower than what economic conditions otherwise would indicate. And small businesses have been a growth engine in the economy."
What’s interesting is that according to other recent Gallup polling American workers think U.S. job creation is the best in five years. Workers are reporting for the first time since 2008 that their employers are hiring and fewer are firing.
Sound like a disconnect with reality? It’s explainable. Workers are reporting what they are feeling right now in their workplace but employers are reporting projections for future hiring. For the time being employment may feel to be in a “good” place as workers are worried less about losing their jobs and encouraged by more hiring in the workplace. However, that may shift significantly as the full effects of mandated healthcare coverage kicks in and employers have to make tough decisions.
It appears the chickens are coming home to roost.
In 2009 and 2010 when American citizens flocked to Washington to express their ire over the takeover of the private healthcare industry by government, skeptics laughed. POTUS and Obamacare advocates from inside the administration or within the mainstream media pointed to CBO data touting that it would reduce the debt and improve the economy –ignoring the law of unintended consequences. They assumed that employers –particularly small businesses – would choose to offer health coverage to their employees over a $2 K fine. And as this polling demonstrates, they assumed wrong!
Let’s hold aside the assault on our freedoms and individual rights (including the right to make our own decisions about health insurance and care).
From a purely economic standpoint, should we really be risking our (slow) recovery and fragile job market right now?