Mass Obamacare Layoffs Coming Next Month

Wednesday, 12 Dec 2012 07:41 AM

By Patrick Watson

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Government programs, no matter how well-intentioned, tend to aggravate the very problems that inspire them. So it will be with Obamacare, I predict. Even if every employer does exactly what the law requires, the result will be fewer workers with health coverage instead of more.

To understand this, we have to dig in to the details a bit. The Affordable Care Act requires businesses with 50 or more full-time employees to either 1) provide a certain level of health insurance coverage, or 2) pay a penalty to the government.

There’s actually a third choice, though: employ fewer people — or at least fewer full-time people.

Editor's Note: ObamaCare Secrets Revealed

Think about retail, hotel and restaurant chains. All provide large numbers of low-wage jobs, which is good, but they still have to make a profit. Adding even a very modest $300 per month health insurance policy can raise their payroll cost 20 percent or more.

This isn’t practical, and employers are already looking for ways around it. Small businesses will try to keep their payroll below 50 employees through outsourcing and/or automation. Larger ones may actually hire more people – but give them fewer than 32 weekly hours in order to stay below the “full-time” threshold.

Both are already happening, in fact. A Gallup survey last month found small business owners have the weakest hiring intentions since the 2008 recession. They literally cannot afford to add worker #50.

Meanwhile, the monthly Bureau of Labor Statistics data show consistent weakness in aggregate hours worked even when total employment goes up. In other words, more people may be working, but they are working fewer hours. Most jobs that can be standardized into a set of repeatable, easily taught steps have already been outsourced to other countries. Those that remain — because they require a physical presence here — are turning into part-time positions with no healthcare benefits.

All this starts now. The employer mandate doesn’t actually kick in until 2014, but the one-year “look-back” period to categorize jobs as full-time versus part-time starts in January 2013 — next month.

Post-holiday layoffs are normal, of course, but this time I suspect we will see much more. Large companies, having spent the last couple of years debugging a mostly part-time labor structure, will soon put the process in high gear.

Editor's Note: ObamaCare Secrets Revealed

Getting more than 32 hours from a chain-store job will be much harder thanks purely to Obamacare. Getting healthcare coverage from your employer — if you are lucky enough to have one — will be tougher than ever.

Once again, government will successfully create more of the very problem it wants to solve.

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