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.
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