MoneyWatch/
July 26, 2013, 7:00 AM
By Alain
Sherter
(MoneyWatch) As
Republicans in Congress continue trying to dismantle the Affordable Care Act,
perhaps the most serious charge leveled against the health care law is that it
is a "job-killer."
Critics say the
ACA requirement that companies provide employees with health insurance is
deterring employers from hiring and has slowed the recovery. Small businesses
are particularly vulnerable, unable to afford the higher costs or the financial
penalties for failing to offer health benefits, they contend. In a
characteristic attack, Rep. Randy Forbes, R-Va., wrote in an editorial earlier
this month that Obamacare "creates incentives to not hire new workers and
cut back the hours employees are allowed to work."
But experts and
some small business advocates rebut such claims. Economist Dean Baker said
there is no evidence that the ACA has noticeably affected hiring. "There's
a lot of confusion with regards to the ACA, so you probably do have employers
that think it affects them in ways that it really doesn't," said Baker,
co-director of the liberal-leaning Center for Economic and Policy Research, a
Washington think-tank.
One reason to
think Obamacare isn't doing much to stifle job-creation: More than 9 out of 10
businesses subject to the law already offer health coverage, while companies
with fewer than 50 employees are exempt (About 60 percent of these smaller
firms offer health insurance, and under the ACA they also may qualify for a tax
credit for offering coverage.) Of the 28 million small businesses in the U.S.,
96 percent won't be subject to the rules, according to the U.S. Small Business
Administration.
Meanwhile,
relatively few of the roughly 4 percent of smaller firms that fall under the
ACA are around the 50-employee threshold. Baker notes in a research brief that
no more than about 1 percent of job growth this year would come from employers
whose headcount puts them near that statutory cutoff.
In short, the
health law is a non-issue for the vast majority of small businesses. And while
some of these employers may ultimately choose to curb hiring or even shed
workers to stay below 50 employees, such firms are too few to make much of an
impact on overall hiring or economic growth.
The view that
Obamacare threatens smaller companies is "strictly a talking point by
those who want to kill off the ACA," said Frank Knapp, head of the South
Carolina Small Business Chamber of Commerce. "We're not going to hurt the
economy. If we have more people with health insurance, we're going to reduce
the cost of health insurance for most people."
The ACA defines
a full-time worker as one who works at least 30 hours a week. So what of the
claim that many employers are cutting employee hours so they don't qualify for
health benefits? In examining U.S. Census data, Baker and economist Helene
Jorgensen found that employers haven't rushed to shift workers to shorter
schedules this year. In fact, fewer people -- 0.6 percent of the U.S. labor
force, or less than 1 million people -- worked just under the 30 hour per week
threshold this year than did so in 2012.
If many
companies had been slashing employee hours this year in anticipation of ACA
penalties taking effect, the number of workers being shifted to shorter
schedules should be rising sharply. For now, that doesn't appear to be
happening.
"While
there may be some employers who make a show of cutting worker hours to just
below the 30-hour threshold, this is clearly not a widespread phenomenon
affecting large numbers of workers," Baker and Jorgensen wrote in a
research brief.
Another reason
to question the depiction of Obamacare as a job-killer: Some surveys show
hiring by small businesses picking up, a sign companies aren't slimming down
ahead of the ACA going into force. Employers with fewer than 50 workers added
84,000 jobs in June, according to payroll processors ADP, the biggest gain
among small business since February.
That hiring
spurt came before the White House said on July 2 that it was postponing the
employer mandate to offer health insurance until 2015. In other words, many
smaller firms boosted hiring even before the Obama administration delayed the
sanctions for failing to comply with the ACA.
Ken Esch, a
partner with management consultant PwC, said small businesses are much less
apprehensive about Obamacare than when the president signed it into law in
2010.
"Initially
when the Act came out there were expectations that there were going to be
significant changes in the types of health benefits," he said. "But
once businesses started to analyze those benefits and compare them to their
existing plans, they found that they weren't going to have to make that many
changes. They have to adapt here and there, but there are no wholesale changes."
As a result,
only 3 percent of private businesses plan to drop coverage because of the ACA,
while a scant 1 percent expect to trim their payrolls to fewer than 50 workers,
according to a recent survey by PwC. Many employers are also holding off in
making decisions about their health plans until the law takes effect and its
economic implications for companies are clear, Esch said.
If small
businesses don't seem to be running scared of the ACA, there remains
considerable uncertainty about how the law will work in practice. The economy
is slowly improving, but many small businesses are still struggling.
"Small
business continues to be in an economic holding pattern," William Dennis
Jr., a senior research fellow at the National Federation of Independent
Business, said in a Senate hearing Tuesday on the impact of Obamacare on small
businesses. "Economic activity remains tepid. Plans to invest and hire
remain low by historical standards."
Still, most
small business owners are far more focused on the usual rigors of running a
company than on Obamacare, said Knapp, who is also co-chair of the ASBC Action
Fund, a policy advocacy group. As ever, the top priority remains getting
customers in the door.
"The ACA
is no different than other laws -- some will try to find their way around
it," he said. "But the vast majority of small businesses are going to
hire the people they need to serve the customers they have to in order to make
money."
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