This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Obamacare Will Crush Small Businesses -- Opinion

From an employee and business point of view, there is no difference between a law making it illegal to hire a 50th employee and the ACA. Some will say "as long as a business offers health insurance there's no penalty." This is only partially correct. It's not enough to offer health insurance; businesses are required to offer "the right insurance for every single employee" because penalties can occur if even one employee's insurance coverage isn't "perfect" in the eyes of the government.

How much will the fine be for an employer beyond all the other costs of hiring? A company with 49 employees wanting to hire the 50th employee will get sucker punched with a $40,000 penalty for hiring a 50th person. Reason: The first 30 people are exempted from the fine, but the employer is fined $2,000 each for remaining 20: 20 times $2,000 equals $40,000. Part-time hours are added to the mix too, so even hiring college students for a few hours a week will become a major cause of concern.

It's just a matter of time before some poor business owner gets hit with a $40,000 penalty from the IRS because they committed the "crime" of offering employment to someone. The first hour is going to be the most expensive hour of labor ever paid by a small business. For many small businesses in this economy, it may make the difference of an entire year's labor lost to the government.

No business will knowingly risk going over if given a choice. Businesses that are close will spend time, money and resources managing this regulation. As a result, the exemption for businesses under 50 employees doesn't mean the ACA won't increase the costs of doing business. Plus, like anything, managers will have to build in a cushion, resulting in even less work performed.

Financially, the best course of action for some businesses is to fire people. If you're a business with 50 to 60 people that faces penalties, you undoubtedly will evaluate if automation, a change in logistics, a cut in hours or service, and or other changes in business practices will result in a greater net profit.

It's sad for both job seekers and business owners that many hours of management resources will soon focus on shrinking a business rather than growing it. The impact on the deficit, unemployment and standard of living is clear for both owners and workers alike.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.60%
FB $117.44 -0.95%
GOOG $692.33 -0.84%
TSLA $232.12 -4.00%
YHOO $36.02 -1.40%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs