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Saturday, Mar 28, 2015

Is Obamacare responsible for a jobless recovery?

Marotta on Money


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A few years ago after the Affordable Care Act passed, I wrote an article titled "ObamaCare is the Worst Legislation in 75 Years." As more of the implications of the bill have become apparent, that assessment has been reconfirmed.

I wrote, "It is impossible to predict all the unintended consequences that will result from such a sweeping increase of federal powers."

Three years later, some of the unintended consequences of the ACA have revealed themselves. In particular, it isn't good for multiple-location restaurants and the starter jobs they create.

The ACA encourages everyone to get health care insurance by punishing those who don't. The premium costs and health care coverage of these insurance policies are regulated. Anyone who refuses to buy health insurance or doesn't get it through their employer must pay a fine of 2.5 percent of their income or $2,085, whichever is larger.

Businesses with at least 50 full-time equivalent employees are required to provide health care for their full-time workers or pay a total yearly fine of $2,000 per each employee they have in excess of 30.

Companies with fewer than 50 FTE employees are exempt from these fines as well as many other burdensome federal employment regulations. Economically, this is fortunate. Most hiring happens in smaller firms.

Multiple-location restaurants are caught in the worst situation. Like smaller firms they are locally owned and run. But unlike small firms, they often exceed 50 FTEs. These firms are required to comply with the Obamacare regulations for all of their full-time workers.

These regulations require either purchasing health care for each full-time employee or paying the fine.

Because the penalty does not apply to part-time employees, economic self-defense has many firms forcing their employees to work less than 30 hours a week regardless of their preference or availability. This trend seems to be universal.

This is part of the reason why employment statistics show part-time employment on the rise while the number of hours being worked remains constant.

It also explains the economic benefits of outsourcing or using technology to replace workers.

Critics question how companies can take these steps in good conscience. But companies did not force such absurd laws on the country.

The government has invented a coercive method of compliance in the form of a corporate fine, and it is completely understandable that corporations are trying to find a plan that benefits them and allows them to remain in business despite the massive tax increases this year on entrepreneurs.

Most liberal reactions to stories like this are to rant about high corporate profits. Or they suggest the legislation is doing businesses a favor by trying to keep their employees healthy.

Only the government can create legislation designed to increase health care coverage whose effect has been to reduce the likelihood that people will be covered.

Meanwhile, over the past three years, the harm to employment has caused countless families to foreclose on their homes, fail to achieve their economic goals and patch together subsistence employment. The ACA has made health insurance less universal and less affordable.

So much for trying to meet the health care needs of the people.

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