We Told You So: Companies Hiring Fewer Full-Time Workers
The Wall Street Journal has a must-read article this morning highlighting one of Obamacare’s effects – companies are replacing full-time workers with part-time employees to avoid the law’s soon-to-be-imposed $2,000 employer mandate penalty. Because full-time employees working more than 30 hours will incur a penalty while part-time workers will not, many firms are in the process of shifting their workforce, as the article outlines:
Some low-wage employers are moving toward hiring part-time workers instead of full-time ones to mitigate the health-care overhaul’s requirement that large companies provide health insurance for full-time workers or pay a fee. Several restaurants, hotels and retailers have started or are preparing to limit schedules of hourly workers to below 30 hours a week. That is the threshold at which large employers in 2014 would have to offer workers a minimum level of insurance or pay a penalty starting at $2,000 for each worker.
Pillar Hotels & Resorts this summer began to focus more on hiring part-time workers among its 5,500 employees, after the Supreme Court upheld the health-care overhaul, said Chief Executive Chris Russell. The company has 210 franchise hotels, under the Sheraton, Fairfield Inns, Hampton Inns and Holiday Inns brands. “The tendency is to say, ‘Let me fill this position with a 40-hour-a-week employee.’” Mr. Russell said. “I think we have to think differently.”…
CKE Restaurants Inc., parent of the Carl’s Jr. and Hardee’s burger chains, began two months ago to hire part-time workers to replace full-time employees who left, said Andy Puzder, CEO of the Carpinteria, Calif., company. CKE, which is owned by private-equity firm Apollo Management LP, offers limited-benefit plans to all restaurant employees, but the federal government won’t allow those policies to be sold starting in 2014 because of low caps on payouts. Mr. Puzder said he has advised Mr. Romney’s campaign on economic issues in an unpaid capacity.
Home retailer Anna’s Linens Inc. is considering cutting hours for some full-time employees to avoid the insurance mandate if the health-care law isn’t repealed, said CEO Alan Gladstone. Mr. Gladstone said the costs of providing coverage to all 1,100 sales associates who work at least 30 hours a week would be prohibitive, although he was weighing alternative options, such as raising prices….
Benefits consultants said most retail and hotel clients have explored shifting toward part-time workers. Those industries are less likely to offer health coverage now, and if they do, the plans typically are too skimpy to meet the minimum-coverage requirements. “They’ve all considered it,” Matthew Stevenson, a workforce-strategy principal at Mercer. In a July survey, 32% of retail and hospitality company respondents told the consulting firm that they were likely to reduce the number of employees working 30 hours a week or more.
Not only is this response predictable – it was predicted, and not just by Republicans but by non-partisan experts. Here’s what the Congressional Budget Office wrote more than two years ago about the Obamacare mandate taxes:
Those penalties…will, over time, generally be passed on to workers through reductions in wages…However, firms generally cannot reduce workers’ wages below the minimum wage, which will probably cause some employers to respond by hiring fewer low-wage workers. Alternatively, because firms are penalized only if their full-time employees receive subsidies from exchanges, some firms may instead hire more part-time or seasonal employees.
CBO also said that “the expansion of Medicaid” and the health insurance subsidies “will encourage some people to work fewer hours or to withdraw from the labor market. In addition, the phaseout of the subsidies as income rises will effectively increase marginal tax rates, which will also discourage work.”
Two years ago, Speaker Pelosi famously said we had to pass the bill to find out what’s in it. It turns out what’s in Obamacare is exactly what non-partisan experts said – provisions that will cost jobs and harm the American economy.