Saturday, October 11, 2014

The Further Damage that Obamacare is About to Do to the Labor Market

Businesses with over 49 full-time equivalent employees were originally supposed to offer insurance plans that met broad government requirements by January 1, 2014. Now, because of delays made by the administration, employers with over 100 employees must provide healthcare coverage to at least 70 percent of their workforce or face fines of $2,000 per worker after January 1, 2015. In reality, this penalty is over $3,000 since it is not tax deductible. Growing from 49 to 50 workers will cost a business $60,000 in penalties once the mandate goes into effect for smaller companies on January 1, 2016, as the first 30 workers will be exempt, Jared Mayer writes.

A new study by University of Chicago economics professor Casey Mulligan illustrates how the Affordable Care Act creates disincentives to both work and hiring that extend far beyond the employer mandate. Key findings (summarized in the infographic below) are that aggregate employment hours will fall by about three percent and that more workers will become “29ers.”

The term “29ers” refers to those who will have their work hours cut to 29 hours a week so their employers can avoid paying penalties, and those who voluntarily work fewer hours in order to qualify for generous exchange subsidies.

1 comment:

  1. Of course, this adds more credence to those who maintain that Obama Care was designed to fail from the start. Its primary goal being to destroy the private insurance market, leading the way to government run health care.