— Fiction: No doubt, you’ve heard that Obamacare will cripple small businesses, the “engine of job growth in America.” In 2014 employers with more than more than 50 full-time workers will have to provide insurance—or pay penalties. If more than 30 of their workers go to the individual Exchanges and receive government subsidies in the form of tax-credits, the business will have to help cover those subsidies by paying a fine of $2000 to $3000 per employee.
Obamacare’s critics speculate that many employers will stop hiring, so that they have no more than 49 full-time employees.
–Fact: As of 2010, there were roughly 5.7 million small employers in the U.S. (defined as those with fewer than 500 workers.) Ninety-seven percent of them have fewer than 50 employees. In other wrods, Obamacare’s employer mandate applies to only 3% of small businesses.
And 99% of those with more than 50 employees already offer insurance. The employer mandate will affect just a tiny sliver of small companies. Lawmakers understood this when they wrote the legislation.
–Fiction: In 2014, many small employers will trim full-time workers’ hours and we will become a nation of part-time employees. Small business owners know that if they have fewer than 50 full time workers (averaging 30 hours a week) they won’t have to pay a penalty, and their workers can go to the Exchanges where individuals can purchase their own insurance, and receive those generous tax credits.
–Fact: This bit of fear-mongering overlooks the fact then when the government counts “full-time employees” it doesn’t just count heads, it counts hours.The law says that the firm must offer insurance if it has 50 full-time “or full-time equivalent employees.”
Here is how the rule works: If a business has 50 full-time employees working 30 hours a week and cuts 10 back to 15 hours, it will have only 40 full-time employees. But it will have to hire more part-timers to cover holes in the weekly schedule.
Assume the company hires 20 new part-time employees, each working 15 hours a week. Because they will be putting in 300 hours a week the government will count them as ten “full-time equivalents.” Add those ten to the remaining 40 full-time workers, and the company then will have 50 full or “full-time equivalent’ -employees.
The business won’t have to insure the 20 part-timerswho work only 15 hours, but it will have to insure the 40 who work full-time—or pay the penalty..
This fiction also overlooks why employers offer benefits. Research reveals that when a business insures workers, it enjoys higher productivity, better morale and lower absenteeism.
—Fiction: Chain restaurants, retailers and hotels can easily cut thousands of workers to part-time so that they don’t have to insure them.
— Fact: Organizing a company’s hiring and staffing around making sure that it won’t have to offer health benefits is hardly a brilliant business plan
Imagine what cutting full-time workers’ hours will do to morale and productivity– not to mention customer service.
Consider this Wal-Mart has stopped hiring full-time employees, and is relying on part-timers and temps. As a result, Forbes reports that Wal-Mart is experiencing “complaints about understaffed stores with empty shelves and inventory piling up in warehouses and back rooms.”.
“It seems even Wal-Mart can’t operate on such a lean staff,” writes Forbes contributor Laura Heller, who describes herself as “a retail geek/expert.”
“Dirty stores, parking lots in disarray and out-of stock products don’t bode well for sales and stores can’t operate that way for long periods.”
Meanwhile, Target, one of WalMart’s chief competitors, continues to offer health care benefits to part-time employees, even though the ACA doesn’t require that it insure them.
Then there is the fact that if a company reduces full-time employees’ hours, it will have to hire more part-timers—and train them.
How much will hat cost? Just how enthusiastic will the remaining full-time employees be about helping to train the newbies?
How many of the chain’ best employees will begin job-hunting, even if they are still working full-time?
Smart companies understand that offering health insurance is all about competing for the best employees, workers who will improve productivity, customer service—and earnings.
The Orlando Sentinel offered an example of how a smart business operates:
“Cumberland Farms convenience-store chain has said that it will make an additional 1,500 employees eligible for employer-sponsored health insurance by classifying them as full-timers ahead of the full debut of the federal Affordable Care Act.
“Currently, 3,000 employees are classified as full time and 4,200 are part time. ‘Part-timers work a variety of hours, while those Cumberland currently considers full time — and eligible for medical benefits — must work 40 hours a week’ the company explained.
“Cumberland Farms has decided to schedule 4,500 of its employees so they work at least 32 hours a week and are eligible for health insurance. (Part-timers, meanwhile, will be limited to less than 30 hours a week.)
“‘We could have pushed everybody [now working] under 40 hours below 30,’ explained Ari Haseotes, president and chief operating officer of the company’s Cumberland Farms division. Instead, ‘we’re making a proactive effort here to go above and beyond, and clearly differentiate ourselves in the job market as a place to come to work.’”
Now that’s a business plan.