Small Businesses Cutting Jobs, Hours to Save Themselves From ObamaCare

By:  Michael Tennant
06/24/2013
       
Small Businesses Cutting Jobs, Hours to Save Themselves From ObamaCare

A new poll finds that small-business owners are slashing jobs, work hours, and expansion plans in advance of ObamaCare's implementation, about which they are extremely pessimistic.

ObamaCare, Americans were assured, would create millions of jobs and be a boon to small businesses. But according to a recent survey, as full implementation of the healthcare law rapidly approaches, small-business owners, rather than rejoicing at their good fortune, are slashing jobs, work hours, and expansion plans.

The Gallup poll, commissioned by the law firm Littler Mendelson, found that because of ObamaCare, 41 percent of small businesses have instituted a hiring freeze, 19 percent have shrunk their workforces, and 18 percent have “reduced the hours of employees to part-time.” Nearly four in 10 small businesses — 38 percent — told pollsters they “have pulled back on their plans to grow their business” in anticipation of the law’s implementation.

“We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn’t realize the extent they were concerned, or that the businesses were being proactive to make sure the effects of the ACA actually were minimized,” Littler Mendelson attorney Steven Friedman told CNBC.

“To think that [nearly] 20 percent of small businesses have already reduced the numbers they have in their business because they’re concerned about the medical coverage is significant, and a bit troubling,” he said.

These businesses, however, have good reason to take such measures. ObamaCare’s employer mandate requires businesses with 50 or more full-time employees either to offer “affordable” health insurance to their full-timers or to pay a $2,000 fine for each employee obtaining subsidized insurance on an exchange. What’s more, the law defines a full-time employee as one who works at least 30 hours per week on average. Employers thus have a strong incentive to keep their head counts below 50 and their employees’ weekly work hours under 30 — something that major restaurant and theater chains and some state and local governments have already begun to do. And since expanding a business entails hiring new employees, which in turn could trigger the employer mandate, owners now have a disincentive to grow their businesses, retarding economic growth and forestalling job opportunities.

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