Why ObamaCare is Costing Full-Time Jobs

The “Affordable Care Act” requires “large” employers ― those with 50 or more full-time-equivalent employees ― to either provide “qualified” health coverage for all of their full-time employees, or pay an annual penalty of $2,000 per full-time employee…”Full-time” is defined as 30 hours or more per week, or 120 hours or more per month…

To get an idea of the effect on workers, consider that for an employee who works 30 hours a week, a business would have to cuts wages by $1.30 per hour to make up for the entire penalty. At 40 hours a week, the penalty would be a bit less ― $0.97 per hour. These are not trivial amounts for workers in low-wage industries like food service, retail, and low-skilled labor.

Full piece by Robert Book worth reading. See also our previous post on $6 health minimum wage.

Comments (15)

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  1. Slater says:

    Further proof that Obamacare was a huge mistake.

  2. Louise says:

    So, will employers cut come full-time jobs or maintain the same number of employees and cut pay by the mentioned amount?

    What do economists think?

  3. Ken says:

    How true. Good post.

  4. Wasif Huda says:

    No doubt this is going to be restructuring certain job industries, and these changes are going to make minimum wage workers at a more precarious position in terms of their job flexibility; in effect, putting a struggling segment of our population at a tougher spot.

  5. Robert says:

    Costs like that will only result in less employment and higher prices passed on to consumers.

  6. Devon Herrick says:

    During the recession, jobs were the #1 priority. Yet, the Administration and Congress championed a health care law that required business above a certain size (still considered small businesses) to tax labor in the form of a health insurance mandate. Most economists agree the cost of employee health insurance is a non-cash form of compensation. In other words, it comes out of workers’ pay. This tax disproportionately falls on low-wage workers because they’re the ones who would not otherwise purchase health coverage. Granted, some people will benefit. But here will definitely be people hurt by this measure.

  7. Ashley says:

    Market distorting regulation is a problem

  8. Diogenes says:

    This is an issue that predates Obamacare. The ERISA nondiscrimination requirements for qualified benefit have long required companies to provide the same health benefits for all full time employees; Walmart has famously used a sophisticated computer system to make sure that all of us subsidize their profits by making manipulating the working hours of their “associates” so they aren’t considered full time and have to depend on publically funded medical care.

  9. Bob Hertz says:

    This important issue could have been solved in about ten minutes if the expansion of health insurance was funded by a simple increase in the Medicare payroll tax
    (which is currently 1.45% on the employer and an identical amount on the employee, on virtually all wages.)

    Some employers still try and evade even the 1.45% by classifying employees as
    ‘independent contractors’, but this practice is limited and gross violations tend to be caught.

    This kind of tax increase could be modified by giving a credit to those employers who do pay for health insurance.

    The whole part-time vs full-time issue could have been avoided – as it is in most other wealthy nations.

  10. seyyed says:

    a lot of large retail businesses already avoid covering their employees by hiring them part-time instead of full-time. i think this is most likely to affect jobs with high-skilled workers that employers are going to work hard to keep at competitive wages.

  11. Charlotte says:

    Basically these “large” employers can either cut some hours on some of their full-time employees and, therefore, have less labor available or pay that fine for not meeting some odd requirement. Who wins again?

  12. Buster says:

    There are no effective cost-control mechanisms in ObamaCare. Health costs will continue to rise faster than our economy grows. Over time, medical spending will crowd out all other areas of consumption. Mid-sized and large firms will be required to provide health coverage. Small firms — and part-time workers at large firms are exempt from the requirement.

    What does this all mean? In years to come, we will all be working a couple of part-time jobs at a hospital or clinic.

  13. Jordan says:

    Bob, how much of a tax increase are you talking? There would need to be about a 45% payroll tax increase just to prevent trustfund exhaustion under the old system. Perhaps broadening the base would make a difference, but do you really think it’d be enough to cover PPACA?

  14. Bob Hertz says:

    A 45% tax increase is not so awful as it sounds. The current payroll tax is about 3%.
    A 45% increase takes the tax to about 4.4%.

    On a $50,000 salary, that is an extra $700 a year.

    This is not a huge price to pay if Americans really want Medicare, and if their leaders are honest with them about needing to actually pay for the government that you say you want.

    But that does not answer your whole question.

    Let us say that Americans want every person of working age to have some health insurance.

    Further say that both the individual mandate and an employer mandate are rejected, by some because they seem repulsive and by others because they are unenforceable.

    Further say that they give me my ten minutes.

    Here is what I do:

    raise the Medicare tax from 4.4% for all, up to 6.0 per cent. The 60% of employers and individuals who now pay for health insurance get a tax credit to take them back to 4.4%.

    The upshot is that the stingy employers and free-riding employees will now contribute 1.6% to a federal health insurance program. it won’t be great insurance but it will cover major illnesses and accidents.

    What I am calling for is the very essence of “play or pay.”

    The only enforcement problem which I see is that people could buy health insurance for 2 weeks in December and then try to avoid the tax. This can be policed with 1099 forms in some way.

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