In his State of the Union\u2019s response, Senator Marco Rubio said:<\/p>\n
For example, Obamacare was supposed to help middle class Americans afford health insurance. But now, some people are losing the health insurance they were happy with. And because Obamacare created expensive requirements for companies with more than 50 employees, now many of these businesses aren\u2019t hiring. Not only that; they\u2019re being forced to lay people off and switch from full-time employees to part-time workers.<\/p>\n
Senator Rubio is way ahead of Wall Street, which is still ignoring Obamacare.<\/p>\n
On the most recent \u201cPayroll Friday\u201d Bloomberg\u2019s Tom Keene interviewed the Smartest Economist on Wall Street, justly renowned for his mastery of the myriad methodological mysteries of the payroll survey and the household survey.\u00a0 He noted, more or less in passing, that \u201cNext year Obamacare kicks in.\u201d\u00a0 WRONG.<\/b>\u00a0 Obamacare matters NOW <\/b>because whether or not businesses have to pay fines in 2014 for failing to provide adequate health insurance depends on their average number of \u201cfull-time employees\u201d THIS YEAR<\/b>.\u00a0 So if I have 45 employees but am thinking of expanding, my lawyer will caution me that if I go \u201cover the limit\u201d of 50 full-time employees I could get socked with a big fine.\u00a0 One solution is not to hire new workers; another is to cut the hours of some current workers so they work less than 30 hours and don\u2019t count as full-time employees. So Obamacare will\u00a0discourage hiring this year.<\/p>\n
How to Save $5,000 per Employee<\/strong><\/p>\n It\u2019s messy, complicated, and expensive, partly because the new law mandates a \u201cgold plated package\u201d costing much more than what employers are offering now, particularly in low-wage service industries.\u00a0 Listen to Whole Foods Markets CEO Tom Mackay talking to CNBC: “Say we’re paying $3,200 a year for insurance for somebody, and the new regulations cost us $5,000 to insure somebody. If they work fewer hours, we just saved $5,000 per person.”<\/p>\n A New “Structural Factor”<\/strong><\/p>\n Since payroll employment is arguably the single most important macro number reported each month, and Fed policy partly hinges on unemployment, one would expect Wall Street economists to be \u201call over\u201d Obamacare.\u00a0 They\u2019re not.\u00a0 Today Tom Keene interviewed another Smartest Economist on Wall Street, who went over his team\u2019s Major New Report on the \u201ccyclical\u201d and \u201cstructural\u201d forces impeding employment growth.\u00a0 The \u201cstructural\u201d discussion was all about demography and aging boomers staying out of the labor force and forcing down the participation rate. \u00a0That\u2019s fine, but what about a massive new law that makes it more costly and complicated to hire?\u00a0 Is that also a \u201cstructural\u201d factor worth considering?\u00a0 Apparently not; there was NO<\/b> mention of Obamacare.<\/p>\n Learning from Europe<\/strong><\/p>\n What makes this particularly weird is that a standard \u00a0element of the macro debate in Europe is \u201cincreasing the competitiveness\u201d of countries like Spain and Italy and France, which basically means undoing laws resembling Obamacare that punish companies for hiring more workers (because the more workers you employ, the tougher the regulation you face).<\/p>\n Bringing New Meaning to\u00a0 the Term “Fine Print”<\/strong><\/p>\n The political genius of Obamacare (so far) is that it is so complicated and convoluted and technical and boring that no one pays attention unless they have to.\u00a0 Now employers have to.\u00a0 I won\u2019t try to describe the intricate rules in the notorious \u201cemployer mandate\u201d \u00a0\u2013 that\u2019s way above my pay grade \u2013 but to give you a taste of the risks employers face, consider two hypothetical examples from the U.S. Chamber of Commerce\u2019s highly informative study \u201cCritical Employer Issues in the Patient Protection and Affordable Care Act.\u201d<\/p>\n <\/p>\n Example 1:\u00a0 Betty\u2019s Wire Co. pays a $140,000 fine<\/p>\n In 2014, Betty\u2019s Wire Manufacturing fails to offer minimum essential coverage to its 100 full-time employees, 10 of whom receive a tax credit for the year for enrolling in a state exchange-offered plan.<\/p>\n RESULT:\u00a0 For each employee over the 30-employee threshold, the company owes $2,000, for a total penalty of $140,000 ($2,000 multiplied by 70 (100 \u2013 30)).<\/p>\n <\/p>\n Example 2:\u00a0 John\u2019s Construction pays a $60,000 fine.<\/p>\n In 2014, John\u2019s Construction Company offers coverage and has 100 full-time employees, 20 of whom receive a tax credit for the year for enrolling in a State Exchange offered plan.<\/p>\n RESULT:\u00a0 For each employee receiving a tax credit, the employer owes $3,000, for a total penalty of $60,000 (20 times $3,000).\u00a0\u00a0 (Go to the Chamber\u2019s study for the gory details about the \u201ccap\u201d on the fine.)<\/p>\n <\/p>\n Small Business Confidence Is in the Sub-Basement<\/b><\/p>\n Obviously this issue is most burdensome to small business.\u00a0 It\u2019s one reason why the NFIB Small Business Confidence index is an abysmal 89 \u2013 lower than during the 1991 and 2001 recessions<\/b>, even though we are four years into an economic expansion, corporate profits are strong, and the stock market is soaring.\u00a0 The NFIB reports that healthcare costs are the Number One Problem facing small business.<\/p>\n Copyright 2013 Thomas Doerflinger.\u00a0 All Rights Reserved.<\/p>\n","protected":false},"excerpt":{"rendered":" In his State of the Union\u2019s response, Senator Marco Rubio said: For example, Obamacare was supposed to help middle class Americans afford health insurance. But now, some people are losing the health insurance they were happy with. And because Obamacare … Continue reading