Businesses in low-wage industries are opting to hire more part-time workers and to cut the hours of full-time workers due to rising ObamaCare costs began trending in 2014. These strategies are only expected to grow next year.
Obamacare was supposed to "cut costs and make coverage more affordable for families and small businesses” according to President Obama in 2009. So why is the exact opposite happening with added unintended consequences of clipping the paychecks of American workers?
According to a new study by a small-business trade group, 42 percent of firms surveyed say their health plan costs have risen at least 10 percent and as a result of ObamaCare, 37 percent are delaying or postponing investment and 26 percent are freezing or reducing wages.
These are strategies that a majority of small businesses are employing to cushion the blow of rising labor costs while being compliant with ObamaCare’s employer mandate.
Under the President’s signature healthcare law, businesses that employ at least 100 full-time workers – or full-time equivalents including part-time workers – must offer health care benefits to at least 70 percent of those worker 30 hours or more by January 1, 2015. Otherwise, like individual and families who don’t prove healthcare coverage for 2014, they will be forced to be a penalty. By 2016, the percent of covered workers will rise to 95 percent and smaller companies with 50 to 99 employees will be required to offer coverage as well.
As you can expect, some industries will feel the pinch far more than others. Food service, retail, and warehousing will experience bigger effects because health insurance represents a very large share of their total employee costs. And let’s not forget that turnover in these industries is extremely high making the administrative burden that much heavier.
So what’s a company to do? Hire more part-time workers and reduce existing employee hours of course. However, for affected workers the pain is immediate.
A majority of small businesses say the Affordable Care Act already has hurt their profits, forcing them to reduce or postpone investment, withhold raises or trim other types of benefits, according to a new survey by the top small-business trade group.
Ninety-four percent of businesses with at least 100 workers and 55% of all firms already offer health benefits to at least some employees, according to Kaiser Family Foundation and the Health Research and Educational Trust.
Still, some firms are taking steps to avoid the mandate.
Michelle Neblett, senior director of labor and workforce policy for the National Restaurant Association, says many restaurants are being more cautious about boosting the workweek of part-timers to 30 hours or more, doling out such increases to reward top performers.
Those strategies have not had a noticeable impact on the labor market. Monthly job growth has averaged 240,000 this year, up from 194,000 in 2013. And full-time employment has increased at about twice the rate of part-time payrolls, Labor Department figures show.
Still, the number of part-time workers who say they'd prefer full-time jobs has remained stubbornly high. That can at least partly be traced to the inclination of the restaurant, retail and hotel industries to hire more part-time workers to sidestep the ACA mandate, Royal Bank of Scotland wrote in a recent report.
The Administration and pundits are quick to tout the falling unemployment rate each month, but gloss over the fact that American workers are dropping out of the job market entirely or are taking part-time jobs although they would rather have full-time work. It’s a problem when someone wants to work more and they can’t find someone willing to hire them or give them more work because of policies like ObamaCare.
What affects may this lead to? More part-time workers holding multiple jobs to make up a full-time salary. They’ll have less discretionary funds for spending which has a cumulative stimulatory effect on the economy. Consider that they’ll delay major purchases such as homes and cars, and be more frugal with everyday grocery store and retail purchases. For young people, who tend to work these low-wage jobs, it will retard their career, earnings, and personal growth as they delay many milestones.
And on a social level, workers with multiple part-time jobs have less time to spend with their families. It’s not a stretch to see how familial bonds among low-wage workers will be stretched as thinly as their budgets.
Similar impacts on formerly full-time workers whose hours have been cut as well.
ObamaCare is a bad deal for American workers. Unfortunately, each day exposes just how harmful it is.