Thursday, November 8, 2012

Obamacare vs. Jobs

Job seekers will soon have a harder time finding full-time work, thanks to Obamacare. As of 2014, the law will attempt to force employers to provide insurance — but in doing so, it will have the unintended effect of making part-time employees more desirable than full-timers.
That’s because if a business with more than 49 full-time employees fails to offer insurance coverage, it will be required to pay a fine. And the fine will apply starting not with the 50th employee, but with the 31st. At $2,000 per employee after the first 30, these fines add up fast. A business that surpasses the threshold by just one full-time employee will face $40,000 each year in penalties.
Businesses that can easily substitute part-time for full-time labor — in particular restaurants, hotels, and retailers — will have a strong incentive to do so. The Wall Street Journal reports that Carl’s Jr., Hardee’s, Red Lobster, and Olive Garden are already planning to hire part-timers instead of full-timers at some or all of their locations. Other employers will restrict their current full-time employees to 30 hours a week so that they will be considered part-time under the law. And, of course, some businesses will opt to stay smaller. France provides an instructive example: There, 50 employees is the magic threshold for whether labor regulations apply. And — no surprise — the country “has more than 2.4 times as many firms with 49 employees as with 50,” Jed Graham notes in Investor’s Business Daily.

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