It is starting, we are seeing some of the first jobs lost and hours cut due to Obamacare, but expect this to become a trend. A Wendy’s franchise owner in Omaha Nebraska has said that he will have to cut 300 employees’ hours to 28 per week, because the Patient Protection and Affordable Care Act (Obamacare) requires employers to begin paying for employees’ health insurance when they work 32 hours per week. Thanks to Obamacare, 300 people will now work fewer hours, making less money, while having the added expense of purchasing health insurance, or paying a fine to the government. This should not be a surprise.
Another aspect of how Obamacare will kill jobs is in the debt it creates. When the bill was being considered Obama liked to go around lying about how it would reduce the deficit. Of course this was blatantly false, it will increase the deficit by about $75 billion a year, which according to the Heritage Foundation will lead to approximately 670,000 lost jobs annually. This is because debt creates interest payments, which need to be paid, instead of that money going toward investment and job creation.
Higher interest rates mean that more American tax dollars will go toward paying the interest on the federal debt rather than paying down the principal. Simulations using dynamic analysis estimate that the government would spend an average $23 billion more per year on interest rate payments over the 2010–2020 year window than it would without the PPACA.
According to the same Heritage Foundation article on the impact of Obamacare on the economy, the taxes, fees, and penalties in the bill will cause our “economy to produce $706 billion less worth of goods and services”. After ten years in effect, “debt held by the public will be $753 billion higher than it otherwise would have been”. Premiums for individuals will also rise due to requirements that insurance cover more things.
Another article from the Heritage Foundation called “Obamacare: Impact on Businesses”, discusses what these extra burdens and taxes will mean for different size businesses. Medium sized businesses with 50-199 employees, will begin paying a tax in 2014 to offset the cost of individual employees receiving premium subsidies. Again, this will hurt the workers the most, even though the bill was purported to help them.
Employees will likely bear most of the burden since these costs will likely be passed on to them in the form of reduced wages, discontinued hiring, or loss of employment. Instead of adding more regular full-time employees, some businesses will simply increase hours for current employees, hire low-skilled and low-income labor, or opt for more temporary or seasonal workers.
And for small businesses–companies with fewer than 50 employees–Obamacare will likely mean that employees do not get coverage; as it currently stands, the bill includes nothing to stop small businesses from not adding coverage, or dropping current coverage, due to the increased costs. Uncertainties about the true costs of compliance with the law are another harmful piece of this legislation. After all the exclusions, only firms with 20 or fewer workers, or low income workers will receive the “small business tax credit”.
In terms of the regulatory burden, most small businesses will need to hire someone to make sure they are complying with regulations–which means a job which previously contributed to the productivity of the business, will instead go towards complying with government mandates. The costs will also be increased in the accounting department. There is also a medicare payroll tax, not indexed for inflation, that will end up hitting many small businesses, and further hurt economic growth with a new medicare non-payroll investment tax.
But how could the lawmakers who passed this bill have known all this when they did not even read the bill before voting on it? Nancy Pelosi infamously remarked, “But we have to pass the bill so that you can find out what’s in it”. Were all these detrimental effects considered in the 72 hour period that congress had to read the 1000 page bill? I think not. We have an irresponsible legislature that has sold out the American people, and broken their oaths to support and uphold the Constitution. Otherwise, why would the bill have included an exemption for the very people who passed it?