Obamacare Mandate Means Minimum Wage Employees Cost Businesses $10.30 an Hour
James Sherk /
Newscom
The Congressional Budget Office (CBO) just reported that President Obama has already effectively raised the minimum wage.
How so? The Obamacare employer mandate requires employers that do not provide “qualifying” health benefits to pay a steep penalty. Few minimum-wage employers provide Obamacare-compliant health coverage. So the penalty adds to their cost of hiring—and thus reduces employment. As the CBO puts it:
[S]ome employers will respond to the penalty by hiring fewer people at or just above the minimum wage—an effect that would be similar to the impact of raising the minimum wage for those companies’ employees.
This confirms something The Heritage Foundation warned about last year. Heritage research found that the minimum cost of hiring a full-time worker will rise to $10.30 per hour nationwide when the mandate takes effect next year. This figure includes the minimum wage, payroll taxes, and the Obamacare penalty. From the employers’ perspective, the President has already instituted a $10 minimum wage for full-time workers. They will respond by reducing hiring and cutting hours.
This hike means all pain and no gain for minimum-wage workers. Raising the actual minimum wage increases some workers’ incomes while depriving others of jobs. But the Obamacare penalty goes to the government, not to workers. So Uncle Sam has made creating full-time jobs for near-minimum-wage workers more expensive—without increasing their pay. Many workers will soon wish this was a change they did not have to believe in.