Best of the Week
Most Popular
1.RED ALERT: Paris Terror Attacks - What to Expect Next - STRATFOR
2.Paris Terror Attacks, Death Pangs of a Dying Religion, and Impact on BrExit EU Referendum - Nadeem_Walayat
3.Paris Terror Attacks, Islamic State Attempting to Spark Civil War in France - Nadeem_Walayat
4.Three Shocking Charts That Prove Gold Price Rally Is Coming - Sean Brodrick
5.Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - Mike_Shedlock
6.Africa Population Explosion - Why Europe's Migrant Crisis is Going to Get A Lot Worse - Video - Nadeem_Walayat
7.Gold Mining Stocks May Be The Buy Of The Century - Jeff_Berwick
8.Grandmaster Putin Beats Uncle Sam at His Own Game - Mike_Whitney
9.BRICS? No, CRISIS - Raymond_Matison
10.UK Housing Market Affordability, House Prices Momentum and Trend Forecast - Nadeem_Walayat
Last 5 days
George Osborne's War on Buy to Let Sector Trending Towards Doomsday - 26th Nov 15
Will Turkey Drag NATO into War With Russia in Syria? - 25th Nov 15
George Osborne’s Autumn Statement and Spending Review Full Text - 25th Nov 15
Will Fresh QE From ECB Boost Gold? - 25th Nov 15
Sheffield, Yorkshire and Humberside House Prices Forecast 2016-2018 - 25th Nov 15
Investors Watch Out For The Auto Industry… - 24th Nov 15
BEA Revises 3rd Quarter 2015 US GDP Economic Growth Upward to 2.07% - 24th Nov 15
Stock Market Supports Are Being Broken - 24th Nov 15
Is Gold Price on the Verge of a Breakout? - 24th Nov 15
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation - 24th Nov 15
Silver Price, COT, US Dollar Updates and More - 24th Nov 15
UK Regional House Prices Analysis - Video - 23rd Nov 15
Crude Oil Swinging For The Fences - A 20 to 1 Option Play - 23rd Nov 15
US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation - 23rd Nov 15
UK Regional House Prices, Cheapest and Most Expensive Property Markets - 23rd Nov 15
Stock Market Rally Losing Momentum? - 23rd Nov 15
Will Gold Price Drop Below $1000 Soon? - 23rd Nov 15
Gold and Silver Sector Big Green Light and Low Risk Entry Setup... - 23rd Nov 15
Limits to Economic Growth - Challenge and Choices - 22nd Nov 15
Long Dollar Trade and Current Copper Price Below Cost of Production - 22nd Nov 15
UK Housing Market House Prices Affordability Crisis - Video - 21st Nov 15
The Fed Has Set the Stage for a Stock Market Crash - 21st Nov 15
Stock Market Primary V Wave Continues - 21st Nov 15
Gold And Silver - Value Of Knowing The Trend - 21st Nov 15
UK Footsie Bulls Set To Foot The Bill - 21st Nov 15
UK Housing Market Affordability, House Prices Momentum and Trend Forecast - 21st Nov 15
GDX Gold Miners’ Strong Q3 Results - 20th Nov 15
End of Schengen, Stock Market’s Technical Strength Grows - 20th Nov 15
Justice for All and The Curious Case of Zambia - 20th Nov 15
Paris, Sharm el-Sheikh, and the Resurrection of Old Europe - 20th Nov 15
Silver Prices and The Management of Perception - 20th Nov 15
Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - 20th Nov 15
Waiting for Goldot Again - 20th Nov 15
Michael Curran Goes Down-Market Shopping for Gold Stock Winners - 20th Nov 15
Why Isn’t This Incredibly Bearish Bond Market Development Making the News? - 19th Nov 15
SPX Appears to have Stopped its Rally - 19th Nov 15
The Great Fall Of China Started At Least 4 Years Ago - 19th Nov 15
Using Elliott Waves: As Simple As A-B-C - 19th Nov 15
Has Deflation Been Ddefeated? - 19th Nov 15
Dow Jones Stock Market Index is Not Going to Crash - 19th Nov 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Reasons to Get Excited About Japanese Stocks

Obamacare's War on Full-Time Jobs Will Sucker Punch Economy

Politics / Employment Apr 19, 2013 - 12:12 PM GMT

By: Money_Morning


David Zeiler writes: Obamacare's rules regarding hours worked and employer-sponsored healthcare coverage have entire industries looking at cutting down on their number of full-time employees in favor of more part-time employees.

Large industries affected include hotels, restaurants and retailers, as well as small businesses of all stripes.

In essence, the hefty financial burden imposed by Obamacare for having too many full-time employees is creating a huge incentive for many employers to cut workers' hours, or, in some cases, avoid hiring altogether.

Tens of millions of American workers are at risk of being denied employer-sponsored health insurance as a result, and will end up with less pay to boot.

It could be a disaster for the still-lagging U.S. economy.

"If you want to have reduced work, lower wages and economic stagnation, this is a great way to do it," Ed Haislmaier, a senior research fellow at the Heritage Foundation, told FOX News.

How Obamacare Discourages Full-Time Jobs
In trying to achieve the goal of having health insurance for all Americans, Obamacare - officially known as the Affordable Care Act - created specific requirements for employers.

The Obamacare law says that every employer that has 50 or more full-time employees must offer health insurance to anyone who qualifies as full-time, defined as anyone who works at least 30 hours a week.

Employers that fail to offer health insurance as required must pay a penalty of $2,000 per worker beyond the threshold of 30 employees. Yes, that means hire No. 50 isn't a $2,000 a year penalty - it's a $40,000 a year penalty.

Of course, every hire after that incurs another $2,000 a year, so adding more full-time employees in the absence of a health insurance plan can get very expensive.

Franchise industries (like fast-food and restaurant chains) and other small businesses often operate on thin profit margins - the net profit averages 3.5 %.

That's why such businesses have rarely offered healthcare benefits in the first place. They'll do whatever it takes to stay beneath the Obamacare thresholds.

"Many stores will have to cut worker hours out of necessity. It could be the difference between staying in business or going out of business," Stephen Caldeira, president of the International Franchise Association, told The Wall Street Journal.

Obamacare could cost the franchise industry $6.4 billion and put 3.2 million jobs at risk, according to a study done in 2011 by the Hudson Institute.

Meet Obamacare's "49ers" and "29ers"
Many smaller companies have already started to limit hiring to 49 employees to avoid the Obamacare triggers, earning the nickname "49ers."

Meanwhile, service-oriented businesses are seeking to keep work weeks below 30 hours - the "29ers" - because they don't have to offer health insurance to part-time workers.

According to The Wall Street Journal, franchisees of Burger King, McDonald's, Red Lobster, KFC, Dunkin' Donuts and Taco Bell have all started to nudge employees into part-time hours.

They can't afford to wait until the law goes into effect Jan. 1 because Obamacare will base the status of employees on their work schedule in 2013.

Just this week, Regal Entertainment Group, which operates 500 movie houses in 38 states, said it has cut the schedule of thousands of employees to less than 30 hours a week. A company memo blamed the move on Obamacare.

Even some states have shifted their employment policies in response to the Obamacare requirements.

Earlier this year, Virginia Gov. Bob McDonnell told state agencies to reduce hours worked by part-time employees to less than 30 to avoid an estimated increase in annual health insurance costs to the state of $61 million to $110 million.

Lost Pay Will Damage U.S. Economy
The biggest losers here, of course, are the millions of workers affected by these changes.

Their reduced hours will ensure that not only will they be denied employee-sponsored health insurance, they'll also be forced by law to buy health insurance from an Obamacare exchange or face financial penalties themselves.

Worst of all, the reduced hours will mean less pay.

The last thing workers making less-than-average wages need is a pay cut.

Equally concerning is the Obamacare-generated bias toward part-time workers, which we're already seeing.

According to Gallup, part-time jobs have risen from 17.6% of the labor force last July to 20.6% in February. That's an ominous trend.

A rising proportion of part-time workers making less money will put a new drag on the U.S. economy, 70% of which is driven by consumer spending.

When you add in the number of jobs that won't be created because of companies trying to stay below the 50-employee threshold, it's clear that Obamacare is going to be a hard pill for American workers to swallow.

"Democrats who thought they were doing workers a favor by mandating health coverage can't seem to understand that it doesn't help workers to give them healthcare if they can't get a full-time job that pays the rest of their bills," The Wall Street Journal observed in a recent editorial.

Source :

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2015 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History