Monday, December 5, 2011

Obamacare Increasing Uncertainty, Decreasing Job Growth

Businesses small and large are once again showing signs just how Obamacare is affecting their willingness to hire.  In his Sunday column, George Will writes about how Obamacare’s new health insurance mandates mean the Carl’s Jr. chain will open fewer stores, and therefore hire fewer workers:

When CKE’s health-care advisers, citing Obamacare’s complexities, opacities and uncertainties, said that it would add between $7.3 million and $35.1 million to the company’s $12 million health-care costs in 2010, [CEO Andy ]Puzder said: I need a number I can plan with.  They guessed $18 million — twice what CKE spent last year building new restaurants.  Obamacare must mean fewer restaurants.

And therefore fewer jobs.  Each restaurant creates, on average, 25 jobs — and as much as 3.5 times that number of jobs in the community.  (CKE spends about $1 billion a year on food and paper products, $175 million on advertising, $33 million on maintenance, etc.)….

CKE restaurants have 95 percent employee turnover in a year — not bad in this industry — and the health-care benefits under CKE’s current “mini-med” plans are capped in a way that makes them illegal under Obamacare.  So CKE will have to convert many full-time employees to part-timers to limit the growth of its burdens under Obamacare.

In an economic climate of increasing uncertainties, Puzder says, one certainty is that many businesses now marginally profitable will disappear when Obamacare causes that margin to disappear.  A second certainty is that “employers everywhere will be looking to reduce labor content in their business models as Obamacare makes employees unambiguously more expensive.”

It’s not just franchisees groaning under the weight of Obamacare’s mandates.  On Friday, the PBS News Hour interviewed Bobby Joslin, the owner of a small business sign company in Nashville, who agreed that Obamacare is reducing hiring:

We’re fighting mandates that just keep coming at us at nowhere….For instance, the Obamacare, when we bring on a new employee, we don’t know what that employee truly is going to cost us in 2014.  And we’re not in the practice of hiring people and then laying them off.

These real-world testimonials sync with the views of many economic experts.  Analysts at UBS have stated that Obamacare is “arguably the biggest impediment to hiring, particularly hiring of less skilled workers.”  And the President of the Federal Reserve Bank of Atlanta has said that he has “frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

At a time when unemployment remains stubbornly high, and 300,000 workers LEFT the job market last month, it’s clear one of the main culprits – the many mandates in the massive 2,700 page health care law.