A Washington Post front-page story reported what many of us already know: The employer mandate in Obamacare is causing employers to cut workers’ hours as well as the number of workers they employ.
The employer mandate penalizes employers that do not provide the proper mandated level of insurance to their employees. Employers can avoid the penalty if their employees are not full time and work less than 30 hours a week. So it is not surprising that employers have cut the number of hours for many employees, especially in the restaurant industry.
The Post story isn’t focused just on businesses but also on state and local governments that are reducing hours to avoid the Obamacare penalties. Businesses and the government are doing this not because they are heartless but because new Obamacare insurance is a new additional expense for businesses to provide. Businesses can pay for these higher costs by raising prices for goods sold, cutting other business costs, or reducing profit margin. Governments can pay for the higher costs only through higher taxes or cutting other government spending areas.
Obamacare increases the cost of employees to business and government. It encourages businesses to delay hiring or hire only part-time workers compared to full-time employees. In the most recent report on “Current Economic Conditions” by the Federal Reserve Bank Districts, the Chicago District wrote, “In addition, several retailers reported that the Affordable Care Act would lead to more part-time and temporary versus full-time hiring.” Other districts expressed similar concerns over the costly impact of the law.
In a surprise move, the Obama Administration unilaterally delayed the onset of the employer mandate. But a temporary delay is of little help, because many entities had already decided to cut hours. For many of these employers, they will not choose to increase hours now only to cut them again next year. This is why the only answer for the many problems of Obamacare is to repeal it.