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Magazine 24
Thanks
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Obamacare, Small Businesses Plan on Eliminating Jobs Before 2014
Obamacare’s
employer mandate has small businesses scrambling to reduce their
workforce in
anticipation of the law’s implementation in 2014. Under the employer
mandate,
businesses with 50 or more full-time employees have to provide coverage
or pay
a $2,000 penalty for every worker minus the first 30. Growing
businesses have
discovered that expanding their workforce beyond 50 fulltime workers is
simply
too burdensome. In order to survive, many of these companies will have
to
either scale back the hours of existing employees so that they are no
longer
classified as fulltime or let them go altogether. CNN reports on how a
few
businesses are grappling with their mandate:
Kari
DePhillips, who co-owns the Content Factory, a public relations firm in
Pittsburgh, was hoping she could just break up the company to sidestep
the
rule. Maybe one firm would do marketing while the other builds websites.
The small
company is on pace to exceed the 50-worker threshold in the next few
years.
DePhillips doesn’t want to provide health care, and she definitely
doesn’t want
to pay the penalty, which would be $2,000 per full-time worker minus
the first
30.
“A $40,000
fine to my company would be catastrophic,” she said.
A larger
company mentioned in the same report is similarly burdened:
The other
way business owners are planning to deal with the law is a devastating
one.
They plan to cut staff and switch full-time employees to part-time,
which the
law classifies as less than 30 hours per week.
That’s the
reality for the 425 workers at David Barr’s nearly two dozen KFCs and
Taco
Bells across Alabama and Georgia. Barr has already done the math.
He
currently provides health care for managerial staff only, and it costs
him
about $125,000 to cover the 30 who take it. Extending that to every
full-timer
would cost him another $545,782 a year.
Health
reform’s creation of state insurance exchanges promises to bring down
those
costs, but Barr said any expenses even close to that will still
outmatch his
available cash.
“This
business model isn’t meant to support those costs,” he said.
To minimize
expenses, he’ll fire workers and cut hours to reduce the number of
full-timers
to 60. Then he’ll opt for the penalty instead of paying insurance. A
$60,000
fine pales in comparison to the huge potential rise in health care
costs.
Cashiers
would be replaced by self-order kiosks, cooks with chicken breading
machines.
These options are too expensive now, he said, but they would make sense
then.
Obamacare,
if fully implemented, would be an enormous burden on the small
businesses for
years to come. In addition to those likely to lose their jobs the
employer
mandate, new entrants in the workforce will find that these small
businesses
are incapable of hiring. Under this disastrous scenario, we can expect
months
like this past June to become the new norm, with more adults signing up
for
government dependence than finding a job.
Source:
townhall.com - authored editorial intern Kyle Bonnell
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