19% of Small Businesses Reduced Employees Because of Obamacare



CNBC asks and answers the question Will Obamacare Hurt Jobs? It's Already Happening, Poll Finds



Small business owners' fear of the effect of the new health-care reform law on their bottom line is prompting many to hold off on hiring and even to shed jobs in some cases, a recent poll found.



"We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn't realize the extent they were concerned, or that the businesses were being proactive to make sure the effects of the ACA actually were minimized," said attorney Steven Friedman of Littler Mendelson. His firm, which specializes in employment law, commissioned the Gallup poll.



Forty-one percent of the businesses surveyed have frozen hiring because of the health-care law known as Obamacare. And almost one-fifth—19 percent— answered "yes" when asked if they had "reduced the number of employees you have in your business as a specific result of the Affordable Care Act."



The poll was taken by 603 owners whose businesses have under $20 million in annual sales. The poll supported that anecdotal data with the finding that 48 percent of owners think the law will be bad for their bottom line.



Just 9 percent of the small employers surveyed agreed that Obamacare would be "good for your business," while another 39 percent saw "no impact."



The prevalent pessimism tracks other answers in the poll, which showed that 55 percent of small business owners believe that the ACA will lead to higher health-care costs. By contrast, about 5 percent said the law would lead to lower costs.

When Regal Entertainment Group (RGC) in April blamed ObamaCare for the fact that it was cutting some of its workers' hours, backers of the law mounted a furious backlash against the theater chain, among other things filling its Facebook page with boycott threats.



"Greed and selfishness make me sick," one of them said.



Darden Restaurants (DRI) felt this intense heat last year after suggesting it might shift to more part-time work to minimize the cost of the law's mandate that companies offer coverage to all their full-time workers. CEO Clarence Otis even blamed its lowered outlook for 2013 in part on "recent negative media coverage" over "how we might accommodate health care reform."



Yet while private companies are getting all this unwelcome and hostile attention, local governments across the country have been quietly doing exactly the same thing — cutting part-time hours specifically so they can skirt ObamaCare's costly employer mandate, while complaining about the law in some of the harshest terms anyone has uttered in public.

Schools throughout much of Indiana are cutting the hours of coaches, teachers aides, bus drivers, cafeteria workers and other support staff in an attempt to avoid having to offer them health insurance under the 2010 Affordable Care Act, the Louisville Courier-Journal reports.



Under the law, also known as Obamacare, employers with more than 50 workers will be required to provide coverage for all official full-time employees. Some employers plan to try and skirt the law by pushing full-time employees into part-time work.



“We cannot go out and raise the price of our product to assist us covering this,” Les Huddle, superintendent of the Lafayette School Corporation, told the Courier-Journal.

Temporary staffing jobs hit a record 2.68 million in May as employers look to lighten the burden of ObamaCare's regulations and fines for failing to provide full-time workers health coverage.



Temp employment grew by 25,600, eclipsing the previous high seen in April 2000. In the past four months, the temp industry has added 99,000 jobs, a spurt that has outpaced the gains in every other sector, except the restaurant industry.



The boom in temp employment is no surprise because the industry offers ways to minimize ObamaCare's fines for firms with at least 50 full-time-equivalent workers.



One way temp firms can help is by helping employers to stay below that 50-worker threshold and free from ObamaCare's regulations. Firms above that level who don't provide health coverage will face a $2,000 per-worker fine (minus 30 workers), so the 50th employee could mean a $40,000 fine under ObamaCare.



Consider an employer who needs to hire a full-time worker for a six-month project. If the firm hired this worker directly, it would have to provide health coverage within 90 days of hiring, under ObamaCare rules.



But if an employer hires workers for a six-month stint through a temp agency, the rules are more favorable. Because virtually all temp-agency employment is for less than a year, such workers can still qualify as part-time under ObamaCare, even if they work full-time for up to six months (and perhaps longer).



"Most temporary or contract workers will be considered 'variable' and not eligible for insurance coverage," wrote PACE Staffing Network CEO Jeanne Knutzen in a message to clients last month.



This provision of ObamaCare "creates considerable opportunity for companies like PACE to offer our clients 'variable' workers at significantly less cost than would be required for the client to hire an employee directly."

Mayor Rahm Emanuel plans to start reducing health insurance coverage next year for more than 30,000 retired city workers and begin shifting them to President Barack Obama's new federal system.



The move is aimed at saving the city money and comes as the Emanuel administration has been trying to wrangle significant pension cost concessions from employee unions.



Police officers and firefighters who retired between the ages of 55 and 64 and are not yet eligible for Medicare but whose coverage is guaranteed under union contracts, as well as workers who retired before August 1989 and are protected by a legal settlement.



Cut out as of Jan. 1 will be the rest. That's when the city will begin a three-year phaseout of the coverage, according to the letter signed by Comptroller Amer Ahmad. During that period, premiums, deductibles and benefits could change, the letter states.



Once the phaseout is complete, those retired workers would have to pay for their own health insurance or get subsidies under the Affordable Care Act.

reports Local Governments Reeling Under ObamaCare Costs IBD lists 13 examples of local government layoffs resulting from Obamacare. Here are a few of themAllegheny County, Pa.: "There's frustration and anger and sadness and resentment, you know, but you don't have a voice," said adjunct English professor Clint Benjamin in the wake of the Community College of Allegheny County's decision to cut hours for about 400 adjunct faculty and other employees so it wouldn't have to pay $6 million in ObamaCare-related fees next year.Medina, Ohio: "We feel bad as a city administration and as a council in having to cut hours from 35 to 29," Medina Mayor Dennis Hanwell said. "We have the budget to pay the people, but we do not have the budget to pay for the health care." If they hadn't made that cut, the city faced up to $1 million in new health costs courtesy of ObamaCare.Birmingham, Mich. Commissioner Gordon Rinschler may have summed up best the reaction that countless businesses and governments are having to ObamaCare, saying: "Thereports Obamacare Pushing Indiana Schools To Cut Hours Of Coaches, Bus Drivers, Cafeteria Workers Jed Graham, writing forreports Temp Staffing Jobs Hit Record as Firms Dodge ObamaCare Costs The Chicago Tribune reports Emanuel to shift retired city workers to Obamacare The ill-effects of Obamacare mount every month.Mike "Mish" Shedlockhttp://globaleconomicanalysis.blogspot.com