04.09.2013 0

Is Obamacare at least partially behind last month’s disastrous job creation numbers?

ObamaCareBy Rick Manning — Is Obamacare at least partially behind last month’s disastrous job creation numbers?

At least one prominent traditionally pro-Obama economic analyst, Mark Zandi, chief economist for Moody’s Analytics, thinks so saying on CNBC, “The retail trade number would be consistent not only with the payroll tax but, again, I think the health care reform may be having an impact. Remember the ADP number that said [that] for those companies with employees [from] 50-499, that’s the group that would be affected by the health care reform — we’ve seen a rather sharp slowing in job creation: 43k in January, 20k in February, and minus-five [thousand] in March.”

Zandi’s magic number of businesses that employ 50 or more employees is due to the law exempting anyone with 49 or fewer employees from its impact.

The rational business decision is to not hire the 50th employee, or begin consolidating work or purchasing technology that allows you to get under the 50 employee threshold and stay under it.

Another Obamacare employment impact is that as employers become more informed about the health care law’s implementation, they are quickly learning that actions they take in 2013 will dictate how the law impacts them in 2014.

A prime example is the classification of employees as full time.  If an employee works over 30 hours a week, they are classified as full time under the new law, and the federal government will use 2013 employment data to determine the number of hours an employee works.

Many employers fearing the unknown costs imposed by Obamacare are making the rational decision to reduce employees hours from full to part-time, and avoiding expanding the number of employees to the threshold.

This is not theoretical as companies as diverse as Darden Restaurants and Kroger grocery stores are experimenting with lowering employee hours below the 30 hours a week average in order to follow the law.  That’s tens of thousands of workers who are being converted from full time to part time in just these two companies due to the oncoming onslaught of Obamacare.

While major employers like Darden and Kroger work to follow the law, a Wall Street Journal survey found that 77 percent of small businesses polled online in mid-March expect their health-care plans to cost more next year under the health-care law.

What’s even worse, the non-partisan Congressional Budget Office projects that seven million fewer Americans will have employment-based health insurance by 2022.  This is the exact opposite impact promised by Obamacare supporters when they argued for passage of the law.

Obamacare will even fall short on one of the core promises made by the President himself who claimed that if you liked your current health insurance, you will be able to keep it.  The only problem is that the claim is not true.

A University of Chicago study found that a majority of health plans will have to change to meet Obamacare standards.  This means that those who were happy with their existing plans will likely be forced into a plan that is more expensive as they are forced to incorporate additional, expensive federal government mandated benefits into the plan.

And it is these likely higher costs for health care that has many employers spooked.  With cost hikes projected to increase by 32 percent per person over the first few years the law is in place by the Society of Actuaries, our nation’s job creators are reacting.

Unfortunately, as is usually the case, those who will ultimately pay the price for Obamacare are those who it was purported to help.  A price paid through lower wages to cover the increased health care costs, fewer hours available to work, and fewer full time jobs available as employers protect themselves from the unknown cost increases that threaten to turn their black ink to red.

It seems that for once, Obama’s second favorite economist, Mark Zandi may have gotten it right.  Obamacare is a job killer.  Too bad he couldn’t figure this obvious outcome out when opponents of the law were making the exact argument four years ago.

Rick Manning (@rmanning957) is the Vice President of Public Policy and Communications for Americans for Limited Government.

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