The Obama administration continues to discount the huge impact its health overhaul law is having in turning the United States into a nation of part-time workers, calling reports anecdotal and not based on complete data.
To paraphrase Groucho Marx: Who are you going to believe? Me, or your own eyes?
An avalanche of anecdotes continues to pile up as workers across the country are having their hours cut and their health benefits slashed across a broad range of industries. Take Loren Goodridge for example—the owner of 21 Subway franchises, says he has no choice but to cut the hours of his employees to 29 a week to avoid the law’s penalties.
The negative effects of the law reach the education industry as well. St. Petersburg College, a public university in Florida, is reducing the hours of 250 faculty members because the college says it cannot afford to provide them with health insurance.
Joseph Hansen, the president of the United Food and Commercial Workers Union, which originally supported the law, says the health care law will have a “tremendous impact as workers have their hours reduced and their incomes reduced.”
Historic Part-Time Increases
Bureau of Labor Statistics data show the ratio of part-time to full-time jobs has completely flipped this year from historical trends. Last year, six full-time jobs were created for every one part-time job. This year, only one full-time job is being created for every four new part-time jobs.
The shift to part-time has accelerated over the past several months because of the “look-back” provision in ObamaCare that sets the baseline this year for the number of full-time workers a company employs to determine their compliance with the employer pay-or-play mandate.
The administration may have been trying to stop the damage when it announced in July it would delay for a year the reporting requirements for the health care law’s employer mandate—the requirement that businesses with 50 or more employees provide health coverage that is acceptable to the government or pay a fine of $2,000 to $3,000 per employee per year.
The statute is very clear that the employer mandate is to take effect on January 1, 2014, not a year later as the White House now has directed. The House of Representatives was more than happy to give the administration legal authority to delay the employer mandate, and it passed legislation in July to make the delay legal. But, astonishingly, the president vowed to veto the legislation if it were to reach his desk—which it will not because Senate Democratic leader Harry Reid will not bring it up for a vote. The president would rather rewrite the law by administrative edict instead of following the Constitutional route of asking Congress to change it.
Businesses Don’t Buy Delay
The damage is real, and the one-year delay is unlikely to have a significant impact on hiring. Businesses are not going to hire full-time workers for a year or less only to have to fire them next year.
According to a survey by the U.S. Chamber of Commerce, 71% of small businesses say the health care law makes it harder to grow. One-half of small businesses that must comply with the employer mandate say they will either cut hours of full-time employees or replace them with part-time workers. Twenty-four percent say they will reduce hiring to stay under 50 employees.
Not only is the law taking a toll on part-time workers, but it also is increasing costs for families. ObamaCare’s new health insurance tax alone will raise premiums by $8 billion next year, increasing the average family’s premium by more than $350.
Not Just Small Businesses
Big businesses are being hit by the law, too.
A recently leaked letter from Delta Air Lines to the Obama administration states the “cost of providing health care to our employees will increase by nearly $100,000,000 next year,” much of it due to Obamacare.
The delivery giant UPS is cutting eligibility for spouses of employees who have access to health coverage elsewhere. It says the costs the law imposes are forcing changes, citing the law’s research fee and a tax of $63 per member to help shore up the health exchanges. Other factors are the act’s ban on annual and lifetime coverage limits and its requirement to cover dependent children up to age 26, UPS said. The University of Virginia also is limiting spouse health benefits.
Forcing employers to provide health insurance that soaks up their profits or cuts into operating revenues causes a cascade of distortions. Clearly, the law already is resulting in layoffs, fewer hours, and reduced hiring. It may even force some businesses to shut down.
In our still struggling economy, we should be making it easier for businesses to grow. Instead the law is causing huge dislocations in the labor force and imposing major new costs on businesses—money that could have been invested in growth and new hiring.
Washington needs to recognize the damage ObamaCare is doing to our economy and, as a first step, delay the law’s implementation for a year. Then a new Congress can put us on course to health care reform that will actually help our economy grow and improve our health care sector.