Just What The Doctor Ordered: ObamaCare Could Cost Over 3.2 Million Small Business Jobs


No, O, no it’s not

Over one-third of the 9.1 million full-time jobs among America’s business franchises could be cut back or eliminated by ObamaCare as small businesses struggle to maintain profitability while coughing up money to pay for government-mandated healthcare, according to the International Franchise Association.

Astonishingly, The New York Times – official mouthpiece of the left – recently featured a bakery in San Diego to illustrate the point.

First, a refresher on the mandate: Under ObamaCare, employers with more than 50 employees must either offer health insurance to all full time employees or pay a fine of $2,000 per worker – every year.

Currently, the Baked in the Sun bakery in San Diego does not offer health insurance to 90 of its 95 employees, which means that owners Rachel Shein and Steve Pilarski have one of three choices facing them – none of which will be good for their business: They can offer health insurance to all employees and figure out how to finance the additional cost; they can pay a fine for not offering health insurance; or, they can trim their full-time workforce to 50 employees so they can avoid both the cost of offering insurance and the cost of the penalty.

Welcome to the world of unintended consequences. Although, the cynic in me believes that the Regime knew full well that small businesses would be forced into this dilemma. (Thus, decimating small businesses, thereby forcing millions of more Americans to work for larger companies, many of whom could ultimately be unionized – in the socialist pipe dreams of the community organizer, anyway.)

Baked in the Sun’s owners estimate that the cost of offering insurance will run about $200 per worker per month, or about $216,000 per year to cover all 90 currently uninsured employees, of which the bakery would pay half and the employee would pay the rest. Their annual revenues are $8 million, but because food service is an extremely low-margin business, only about $200,000 of that is profit, meaning that financing the $108,000 employer-paid half of the additional coverage would cost Shein and Pilarski half of their yearly profits. (A leftist’s dream come true.)

Even with an exemption for the first 30 employees, paying the penalty would still cost the bakery approximately $130,000 a year.

So, what’s a small business to do? In this case, Baked in the Sun‘s options are realistically reduced to two: a): provide the insurance, or, b): lay off 45 employees. Of course, “progressives” would argue that given that the bakery already makes an “obscene” profit, of course it should provide the coverage.

So, reduce the owner’s profits to $50,000 each; or reduce the workforce to 50 employees. Hmm. Two thoughts:

Let’s assume that the owners go with option “a.” Accepting that Shein’s and Pilarski’s incomes would be cut in half, at what point would it no longer make sense for them to keep the bakery open? I’ve never worked in a bakery, but I do know that these folks get up a hell of a lot earlier every day than do you or I do. Why would they just not close up shop and go to work for a larger company? (O seen drooling in the corner.)

Let’s now assume that the owners opt for “b.” First, contrary to the protestations of the left, small business owners don’t hate their employees. (You know, like major corporations supposedly do?) I’m sure that Shein and Pilarski have warm relationships with at least most of their employees, and would be devastated by being forced to lay off half of them. Second, Baked in the Sun most likely doesn’t have 95 employees accidentally; the owners obviously need their current workforce-size to operate their business. Reducing their workforce for the sole purpose of complying with ObamaCare would most likely lead to even less profitability – or ruin. (Again, mission accomplished for O.)

Baked in the Sun is just one of tens of thousands of small businesses facing the real-world choices of O’s “affordable” healthcare. No campaign slogans. No too-good-to-be-true promises. Just difficult, real-world choices. A 2011 Hudson Institute study found that the franchise industry alone could face additional costs of $6.4 billion, most of which will be passed on to consumers –  a simple concept that low-information Obamabots are, for some reason, unable to grasp.

A North Carolina Five Guys burgers franchise owner, for example, recently said that he is facing added costs of $60,000 a year under Obamacare – and that he would have to boost prices of burgers, fries and hot dogs as a result. What part of that is so difficult for the socialist mind to understand?

This will all get much worse before it gets better, folks.

O’s America.

Categories: Obamacare

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13 replies

  1. Obamacare is all about power, control, and making people dependent on the government. It is not about good or affordable health care at all. We right wingers tried to warn the American people of the economic calamity this piece of garbage legislation would cause.

  2. By the midterm elections in November 2014 this will become obvious (it has already started).

    But will the people understand that Barack Obama is to blame – or will the media manage to trick the majority yet again?

    • Unlike everything else O has done his damnedest to screw up, this one will finally rest on his shoulders. ObamaCare was – and is – his baby alone. The fallout in earnest will begin long before the midterms – when the crap hits the fan in January. Can’t wait.

  3. Not to quibble, but the option I’m seeing used most often is employers cutting workers’ hours to less than 30 a week to keep the core skilled work force with everyone under full time. Maintaining work levels may actually mean hiring more people at less than 30 hours a week. Yeah, one has a job, but all the extra income is gone. It’s just as rotten in the long run.

    And I’m not so sure it was all unintended.

    • Thought about that too. Assuming that all 90 uncovered workers work 40 hours, and that those man-hours (person hours?) are all necessary to run the business, the bakery would have to hire an additional 30 workers, assuming again, that all workers’ hours would be capped at 30. What now? Shifts? Almost seems like it would be similar to a basketball coach rotating players in and out of a game. (Had to throw the BB reference in there – given that we’re in the middle of the NCAA tournament.) And, what about the impact on the bakery’s loyal employees who need 40 hours of compensation? How many would leave?

      In any case, an employer’s business model should not be turned upside down by a government mandate to purchase health insurance, which brings me to your last point – which is the same one I made in the post.

      • Actually, it’s 29 hours because under Obamacare 30 is considered full time.

        No business model should be turned upside down like this, but it is, and it’s affecting hourly wage earners first-the people who most likely need the money. There’ve been complaints about it for months. Plus, two people in my family were caught in this.

      • 29 hours, 59.999 seconds?

      • Well, it would depend on the punch clock, but, yeah.

      • But even that option means increased operational costs to the company. It really is a no win situation for both the employer and employees in the example given.

      • Yes it does. Even if it didn’t, it still forces a company to make changes to its work force that it wouldn’t otherwise make. And, like I said previously, I’m sure that many full-time employees need the income from 40 hours.

  4. Notice that this is a relatively larger cost hike for the small employers at the margin. The large employers already have full medical factored into their structures and are already priced to cover it. So the point that more small employers will suffer is both accurate and worthy of more emphasis than it’s receiving in the media.

    A related point is that small businesses employ far more people so what impacts them has a commensurate impact on the job market.

    But regardless of what the Prez said; we knew he couldn’t add 20-30 M new beneficiaries at no cost, right? And so did the Congressfolk who voted for it. And thereby cut Medicare $716 B to help fund it.

    Obamacare is both unaffordable and unworkable so whoever is in charge will have to ‘fix’ it. I expect little difference from Dems or the GOP except that the Dems will use it to pay off unions, as they did with TSA at airports. CL sounds a little paranoid; but I suspect, not nearly paranoid enough!

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