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TheStreet Open House

Obamacare Has Already Hurt Hiring by Small Business, Franchises

NEW YORK ( TheStreet) -- Small businesses and franchises have already taken action against the Patient Protection and Affordable Care Act, by either not hiring or by cutting down on employees' hours enough to get them underneath the law's definition of "full-time" in preparation for the onslaught of health care expenses coming in 2015 as a result of the new law.

According to a freshly released report by the International Franchise Association and the U.S. Chamber of Commerce, the controversial Affordable Care Act is already resulting in higher costs of health coverage, which in turn means businesses are cutting full-time jobs.

Despite the postponement of the so-called employer mandate provision of the law to 2015, which calls for businesses with at least 50 full-time employees to offer health insurance to them, small-business owners and franchisees are worried.

The report found 64% of business decision-makers in franchise-owned businesses and 53% of non-franchisee-owned businesses believe the ACA will have a negative impact on their businesses.

Approximately 31% of franchise and 12% of non-franchise businesses said they have already reduced worker hours because of the impending law. Additionally, 27% of franchise and 12% of non-franchise businesses have already replaced full-time workers with part-time employees because of the law, the report found.

The research also shows that -- when fully implemented -- the law's employer mandate will mean that 28% of those businesses report that they will drop coverage for their employees.

"In effect, among this segment of businesses, the employer mandate will almost double the percentage of franchise-owned businesses and more than triple the percentage of non-franchise businesses that will not offer health care," the release says.

The research also shows that the ACA's employer mandate will specifically hurt business growth at companies with 40 to 70 employees. Among those business owners, 59% of franchises and 52% of non-franchises say that they "will make personnel changes to stay below the 50 full-time equivalent threshold."

The survey was conducted by Public Opinion Strategies, polling more than 400 businesses (franchise and non-franchise) with 40 to 500 employees.

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