Sunday, February 24, 2013

Acne medication industry at risk?


Merriam-Webster's online dictionary describes economics as such: a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services

Sharp economists may or may not have been able to predict this social phenomena or economic behaviour in response to the employee and working hours threshold at which additional ObamaCare mandates and requirements kick in but this clever adaption by employers is happening as we speak.

From the Wall St. Journal:

Here's a trend you'll be reading more about: part-time "job sharing," not only within firms but across different businesses.

It's already happening across the country at fast-food restaurants, as employers try to avoid being punished by the Affordable Care Act. In some cases we've heard about, a local McDonalds has hired employees to operate the cash register or flip burgers for 20 hours a week and then the workers head to the nearby Burger King BKW +2.39% or Wendy's to log another 20 hours. Other employees take the opposite shifts.

Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more "full-time equivalent workers" to offer health plans to employees who work more than 30 hours a week. (The law says "equivalent" because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don't offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well.

These employment cliffs are especially perverse economic incentives. Thousands of employers will face a $40,000 penalty if they dare expand and hire a 50th worker. The law is effectively a $2,000 tax on each additional hire after that, so to move to 60 workers costs $60,000.

The article goes on to cite a 2011 Hudson Institute study that estimates the insurance mandate will cost the franchise industry $6.4 billion and put 3.2 million jobs "at risk". Collaterally, that's an awful lot of acne medication at risk as well but maybe, just maybe, it won't be that bad if business franchises like the ones above which are small enough to respond in a nimble fashion and are allowed to operate freely and in their own rational best interests.

Think about it: employees maintain their hours, maintain their mini-med plans and the employers don't get burdened by additional expenses, right? Wrong. We lost the article, but perhaps a month or two ago, Kathleen Sebelius claimed that she would not allow companies to skirt around ObamaCare requirements by staying below employee and working hour thresholds.

Imagine that: companies obeying existing labor laws and even that of the Affordable Care Act in order to maintain working hours and health insurance for their employees and they will still be subjected to bureaucratic thuggery from the highest levels of this nation's goverment.

Of course, the economic and employment impact of the new healthcare law could not have come at a worst time given our stagnant economy and a 30+ year low labor participation rate.

This monstrosity of a law hasn't even been fully implemented yet and businesses are already reacting in a manner that is strongly suggestive of what a train wreck this will all turn out to be.


DooDooEcon said...

At the 2nd amendment rally on Saturday, I had the opportunity to talk to maybe a hundred people. Many of them were aware of the perverse affects of ObamaCare on the 2nd Amendment. I hope some see this article to help them understand the full impact of ObamaCare on the lives of their families.

Dean said...

Thanks, Charles. I was visiting the folks, else I would've been there. I trust you will put up a post soon on the rally. I, of course, will link. Thanks.

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