The ObamaCare employer mandate has been delayed for one year, but small-business owners who stand to be impacted down the road say the law needs to be changed.
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At a House hearing Wednesday on health and technology, small-business owners joined Rep. Chris Collins (R-NY) to sound off on the law’s definition of “full-time employment.” The Affordable Care Act defines full-time employees as those who work 30 hours or more per week.
Rep. Collins said a new study shows nearly 75% of small businesses intend to take some type of action to avoid the health law’s employer mandate, including moving full-time workers to part-time positions.
For small-business owner Stephen Bienko, the president of 42 Holdings and the owner of 15 moving franchises, action will mean limiting the hours of part-time staffers so they don’t average more than 30 hours per week. Bienko says he currently has 72 employees, 20 of whom are part-time. In 2014, he plans to add 34 more part-time workers.
“Many of these part-time employees work three days per week, with 10-12 hour daily shifts,” says Bienko. During the busy season, however, Bienko says part-timers often try to squeeze in as many as five shifts to make extra money. Due to the law, Bienko intends to limit part-timers to only two full shifts per week.
ObamaCare Chipping Away at Profits?
Steve Hermann owns three supermarkets in Missouri, employing 75 full-time associates and 100 part-time workers. While Hermann says he’s proud of the fact that almost all of the full-time staff at his supermarkets participate in the company’s health-care plan, the costs are steep for the business.
“In this year alone, health-care costs for my company exceeded $300,000, not including any in-house administration costs, and we are on track for a significant increase again next year,” says Hermann.
Hermann says a recent survey of the supermarket industry reveals net profit before taxes among independent grocers comes to just 1.65%, making every cent count. As a result, he says he simply can’t afford to provide insurance to part-time employees averaging 30 hours per week, so he will reduce hours.
However, some economists dispute claims that ObamaCare will have a widespread impact on small businesses and employees.
Dean Baker, the co-director of the Center of Economic and Policy Research, points to research from the Kaiser Family Foundation showing that 94% of firms exceeding the 50-worker cutoff already provide ObamaCare-approved insurance. Additionally, he calls the $2,000 penalty for not providing insurance “relatively modest.”
“If the pay of full-time workers averaged just $10 an hour, this would be an increase in annual compensation of less than 10 percent,” says Baker. He compares this to large increases in the minimum wage, which have been shown to provide no major impact on employment.
Addressing more directly the claims made by business owners like Hermann and Bienko, Baker says the law does incentivize keeping workers below the 30-hour cutoff, but he says research suggests the impact will be modest.
That said, Baker says the real effects of the law on employment will only be seen over a longer period of time.
“It is very disruptive to a workplace to overhaul work schedules, especially if workers see the goal as being to deny them a benefit that they would otherwise receive,” says Baker. “For this reason, it is not likely that many employers would restructure work hours immediately after the ACA employer sanctions took effect.”