More than three-quarters of small businesses nationwide say they are still planning to cull their workforces and pare full-time workers to part-time to avoid penalties under the Affordable Care Act, even though they’ve been given a yearlong reprieve, according to a recent survey from the U.S. Chamber of Commerce.
President Barack Obama’s administration recently delayed until 2015 the so-called employer mandate requiring companies with 50 or more full-time workers to offer health insurance or pay a fine.
But the executive action failed to assuage the fears of U.S. Chamber members, 51 percent of whom said they would either cut hours to reduce full-time employees or reduce hiring, while another 23 percent plan to replace full-time employees with part-time workers to avoid triggering the mandate, the survey found.
“The impact of the health care law on small business gets worse with every day that passes,” said Rob Engstrom, senior vice president and national political director for the U.S. Chamber. “As we approach the 2014 elections, we will hold members of Congress accountable for votes on policies that paralyze growth and job creation.”
But statistics show that large and small employers alike were already reducing full-time staff and cutting workers hours and benefits long before the health care law, popularly known as Obamacare, was even conceived.
Nationally, the percentage of workers employed part-time shot up from 16.5 percent in 2000 to 19.9 percent in 2010 — the year the health care law was passed, according to data compiled by the Employee Benefit Research Institute.
The share of the workforce working part-time was even greater in Ohio, climbing from about 26 percent in 2007 to to 29 percent in 2011, figures from the U.S. Bureau of Labor Statistics show.
Some economists say companies would have continued slashing workers’ hours and benefits even without health care reform.
Charles Showell, former dean of the business school at Central State University, notes that at the same time workers’ benefits and hours were being cut, corporate profits were stronger than ever.
Record corporate profits
Corporate earnings climbed to an all-time high of $1.75 trillion dollars in the third quarter last year, but only about 62 percent of that income went to employees — the lowest share since the mid-1960s, according to the U.S. Department of Commerce’s Bureau of Economic Analysis.
“Employers have learned that they can make money and be profitable with fewer workers and fewer workers working full-time with full-time benefits,” Showell said. “The health care law has just given these companies a convenient excuse to continue to pare back staff when they can and reduce hours and benefits, which was something they were already planning to do.”
While cutting back hours and benefits is nothing new for many companies, Obamacare will likely accelerate the practice, which could have tragic consequences over the long run, said Ken Mayland, president of ClearView Economics in suburban Cleveland. Mayland said President Obama’s decision to delay the employer mandate simply delays the inevitable.
“I take a very jaundiced view of this delay in implementing the employer mandate, because I think the administration has come to the same conclusion, privately, that many of us private economists have come to,” Mayland said. The employer mandate “is really a job-killer in the sense that it is causing companies to delay hiring and substitute capital for labor where it can in order to obviate the need for new hiring.
“The (Obama) administration just did not want to deal with all the horror stories that would have come to the surface after Jan. 1 next year (the original deadline to meet the employer mandate) given the fact that 2014 is a Congressional election year,” he said. “But these horror stories will surface when all this takes effect.”
Local chamber of commerce officials say their members are still concerned about the impact of the employer mandate, even though they have more time to comply.
“The delay has not eliminated the issues that the Affordable Care Act has created for Dayton-area employers,” said Chris Kershner, vice president of public policy and economic development for the Dayton Area Chamber of Commerce.
Little future change in hiring
However, the same local employers who have expressed concern about the employer mandate have given little indication that they’re planning drastic changes to their workforces as a result.
“I have not had employers tell us directly that they are going to be laying off individuals,” Kershner said. “What they have told us is that they are looking at the operations of their business, and how they can structure it so that the Affordable Care Act’s impact is minimal on their organization.”
For many small businesses that means holding employment below the employer mandate’s 50-worker threshold.
“The companies that would be impacted by this are saying, “We’re staying where we’re at. We’re not going over 50,”’ said Kenny Craig, president and CEO of the Greater Hamilton Chamber of Commerce.
But not all business owners feel the same.
Dave Dysinger, president of the Dayton-based tool and die maker, Dysinger Inc., said he plans to hire as many workers as necessary to meet the growing demand for his products, even if it pushes his business over the 50-employee threshold and forces him to comply with the employer mandate.
“I base my hiring decisions on business principles,” said Dysinger, who, like the vast majority of employers, already offers health insurance to his workers. “I’m not going to hold my company back in fear of that (employer mandate).
He’s not alone.
Twenty five percent of employers in the metro area plan to add to their workforces, while only 8 percent expect a decline in payroll, and 65 percent anticipate no change, according to the most recent Manpower Employment Outlook Survey for Dayton.