# Is Obamacare causing layoffs? **URL:** \ **Category:** Great Debates\ **Created:** [November 21, 2012, 3:33am UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685 "2012-11-21T03:33:18Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Icarus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/icarus/32/72_2.png) [@Icarus](https://boards.straightdope.com/u/Icarus)\ **Post date:** [November 21, 2012, 9:45pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/21 "2012-11-21T21:45:09Z")
> [@XT](#): > > Consider that, IIRC, they will have to pay something like $2k/month per employee in penalties I don’t think they will be giving raises to go along with it,… Employer paid costs of benefits is considered part of overall compensation (in addition to salary, bonus, etc.) Many companies go to great lengths to communicate this information to employees, e.g. producing Total Compensation Statements detailing employer paid costs of benefits. So, if they just up and stopped then I’m guessing many employees would have a vocal negative reaction. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [November 21, 2012, 9:55pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/22 "2012-11-21T21:55:54Z")
> [@Icarus](#): > > Employer paid costs of benefits is considered part of overall compensation (in addition to salary, bonus, etc.) Many companies go to great lengths to communicate this information to employees, e.g. producing Total Compensation Statements detailing employer paid costs of benefits. So, if they just up and stopped then I’m guessing many employees would have a vocal negative reaction. All true, but if the company can’t compete in their bids due to cost then it’s moot, as the company will go out of business. For a variety of reasons, small businesses are at an innate disadvantage in government contracting, even with small business set aside contracts and 8A status (something my dad’s company no longer has since not only is my dad no longer owner but they graduated from the program). Like I said, it’s something they are crunching the numbers on, and weighing the costs to the benefits…unhappy employees verse going out of business, or trying to balance staying in business with some level of unhappiness from the employees. Or, maybe things won’t be as bad as their worst case projections, in which case they may not need to change a thing…at this point it’s the uncertainty more than anything that has them worried. ---
**Author:** ![EverwonderWhy](https://avatars.discourse-cdn.com/v4/letter/e/ee59a6/32.png) [@EverwonderWhy](https://boards.straightdope.com/u/EverwonderWhy)\ **Post date:** [November 21, 2012, 10:31pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/23 "2012-11-21T22:31:36Z")
> [@XT](#): > > Consider that, IIRC, they will have to pay something like $2k/month per employee in penalties I don’t think they will be giving raises to go along with it, except that employees won’t have to pay their current part towards the current health care, which will save them a couple hundred bucks a month…sort of like a raise, except they would then have to buy health care. Like I said, this is just one option…another they are looking at is changing it from 85/15 (the current ratio the company is paying) to something like 75/25 (or maybe even 70/30). My WAG sitting in shoot the shit sessions with the finance and big wig types of the company is they will go with that, even though it means the employees will take a hit on their take home pay (the company will too btw…this ain’t simply shifting costs to the employees so that they can keep fat margins). They will do whatever is the least disruptive but still gives them some profit. > s. $2k/month? More like a year and small business, companies with less than 50 full-time employees, are exempt from the penalty. Small businesses also get a tax credit (ranging from 35%-50% of the employer contribution) if they decide to provide health insurance. [http://www.kff.org/healthreform/upload/8275.pdf](http://www.kff.org/healthreform/upload/8275.pdf) ---
**Author:** ![MDKSquared](https://avatars.discourse-cdn.com/v4/letter/m/b9e5f3/32.png) [@MDKSquared](https://boards.straightdope.com/u/MDKSquared)\ **Post date:** [November 21, 2012, 10:35pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/24 "2012-11-21T22:35:14Z")
A lot of people like to use government regulations as a scapegoat for their troubles when the real problems lie elsewhere. It’s like when a CEO claims Obama has created an “environment of uncertainty” with higher taxes and regulations when really it’s just that a lack of demand is hurting their bottom line because people have no money to spend on their goods/services. There’s a good quote from Jon Stewart that sums up the mindset pretty well: > [@](#): > > Jon Stewart: The biggest problem with the denizens of Bullshit Mountain is they act like their shit don’t stink. If they have success, they built it. If they failed, the government ruined it for them. If they get a break, they deserve it. If you get a break, it’s a “handout” and an “entitlement.” It’s a baffling, willfully-blind cognitive dissonance best summed up by their head “coach” in what is perhaps my favorite sound bite of all time: > > Clip of actor Craig T. Nelson on Fox News: I’ve been on food stamps and welfare. Did anybody help me out? No! Besides, as has been brought up already, most small businesses aren’t technically hindered by the new legislation. Please see [http://healthreform.kff.org/the-basics/employer-penalty-flowchart.aspx](http://healthreform.kff.org/the-basics/employer-penalty-flowchart.aspx) for a flowchart The funny part about all this: If we went to a single-payer system, a lot of this stuff could be cleared right up. 😛 ---
**Author:** ![EverwonderWhy](https://avatars.discourse-cdn.com/v4/letter/e/ee59a6/32.png) [@EverwonderWhy](https://boards.straightdope.com/u/EverwonderWhy)\ **Post date:** [November 21, 2012, 10:42pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/25 "2012-11-21T22:42:23Z")
[Here’s](http://healthreform.kff.org/the-basics/employer-penalty-flowchart.aspx?utm_source=hrs&utm_medium=web&utm_campaign=timeline) a nifty flow chart that might help explain how penalties work. oops, ninja’ed. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [November 21, 2012, 11:00pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/26 "2012-11-21T23:00:22Z")
Just as a matter of economics, I don’t see how this couldn’t lead to some layoffs or at least reduction in hours. Whether or not growth elsewhere will offset it, why would we suppose that some employers won’t avoid a new cost by reducing their FT force below the threshold that would require them to provide affordable coverage as defined by the law? There has to be employers where the tipping point is such that it saves them a lot of money to do so. How many is a different question, but unless basic economic principles no longer apply, it seems self-evident that some people will be laid off as a result of these thresholds. Someone has 55 FT employees? Not now he doesn’t. After the layoffs turns out he only has 49 FT employees, plus the part-timers he brings in at peak times. Might not be his preferred method of staffing, but he’ll work with it given the cost avoidance. Is there a reason this wouldn’t occur? Employers’ benevolence maybe? Is there something in the law that guards against this? ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [November 21, 2012, 11:08pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/27 "2012-11-21T23:08:45Z")
[QUOTE=EverwonderWhy] $2k/month? More like a year and small business, companies with less than 50 full-time employees, are exempt from the penalty. [/QUOTE] Like I said, that’s from memory, but I believe they have more than 50 employees if you count folks on various contracts. I know for a fact that if they cut off health care they will have to pay a penalty, according to their accountants and tax people, so if that’s the cut off they must. The $2k/month per employee kind of stuck in my head because it seemed so over the top (though, IIRC, they are paying over a thousand per employee per month on health care now, which seems like a lot…I have no idea, since I’m just an engineer and the intricacies of benefits and associated costs is beyond my ken). > [@](#): > > Small businesses also get a tax credit (ranging from 35%-50% of the employer contribution) if they decide to provide health insurance. I have no idea, but the people saying this stuff are their accounting and tax people, so they must be aware of this and still think it’s a concern. They are the experts at this stuff, especially wrt their company and it’s expenses and liabilities. Whether their worries are justified I couldn’t say, but I don’t think it’s baseless, since they have been looking at this stuff since before ‘Obamacare’ was ratified. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [November 22, 2012, 12:30am UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/28 "2012-11-22T00:30:47Z")
> [@Stratocaster](#): > > Someone has 55 FT employees? Not now he doesn’t. After the layoffs turns out he only has 49 FT employees, plus the part-timers he brings in at peak times. Might not be his preferred method of staffing, but he’ll work with it given the cost avoidance. Is there a reason this wouldn’t occur? Employers’ benevolence maybe? Is there something in the law that guards against this? Well, according to the flowchart above, the penalty applies to the number of employees over 30. So that helps, although I wonder why they didn’t set the two thresholds to be exactly the same. It’s usually a bad idea to have a large penalty kick in at some specific value; better to make it gradual. If you have 50 employees and don’t meet the ACA criteria, you pay a penalty of $40k. Obviously someone is getting the axe to bring it down to 49. If the penalty were $2k, it becomes a harder decision. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [November 22, 2012, 12:32am UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/29 "2012-11-22T00:32:50Z")
> [@Dr.Strangelove](#): > > Well, according to the flowchart above, the penalty applies to the number of employees over 30. So that helps, although I wonder why they didn’t set the two thresholds to be exactly the same. It’s usually a bad idea to have a large penalty kick in at some specific value; better to make it gradual. If you have 50 employees and don’t meet the ACA criteria, you pay a penalty of $40k. Obviously someone is getting the axe to bring it down to 49. If the penalty were $2k, it becomes a harder decision. I suppose it’s because if the penalty is lower than the cost, you just pay the penalty, right? ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [November 22, 2012, 12:39am UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/30 "2012-11-22T00:39:10Z")
> [@Stratocaster](#): > > I suppose it’s because if the penalty is lower than the cost, you just pay the penalty, right? Yeah, but that’s not the worst possibility. There are three options, in decreasing order of “goodness”: 1. Meet the ACA criteria 2. Pay the penalty 3. Fire people until the ACA doesn’t apply But huge marginal penalties means that 3 is sometimes preferable to 2. If the penalty isn’t enough that 1 isn’t attractive then you can increase it on a per-person basis, but don’t design the system such that 3 becomes the best alternative. ---
**Author:** ![MDKSquared](https://avatars.discourse-cdn.com/v4/letter/m/b9e5f3/32.png) [@MDKSquared](https://boards.straightdope.com/u/MDKSquared)\ **Post date:** [November 22, 2012, 6:04pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/31 "2012-11-22T18:04:00Z")
Thing is, people choose (3) as a way to scapegoat and try to make Obamacare unpopular so they don’t have to worry about (1) or (2) anymore in the future. ---
**Author:** ![Mdcastle](https://avatars.discourse-cdn.com/v4/letter/m/958977/32.png) [@Mdcastle](https://boards.straightdope.com/u/Mdcastle)\ **Post date:** [November 22, 2012, 6:20pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/32 "2012-11-22T18:20:57Z")
> [@cougar58](#): > > Sure. > > How is it ObamaCare can be causing layoffs in the USA, when Canadian firms are making the same industrial parts once made in the USA, given that Canada has nationalized health care? > > Wouldn’t the Canadians being laying off workers as well, if nationalized health care was the root cause? ObamaCare is not anything close to Canadian style nationalized healthcare. As for the original question, I’d say “No.” ObamaCare is just a convenient scapegoat anytime an employer wants to layoff employees for any reason. ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [November 22, 2012, 8:45pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/33 "2012-11-22T20:45:22Z")
> [@Really\_Not\_All\_That\_Bright](#): > > The $2,000 fine levied on employers who do not offer “minimum essential coverage” to full time workers will probably result in some (mostly retail and food service) employers trimming workers’ hours. However, the law includes a “full time equivalence” provision that makes this harder than people like John Schnatter are claiming. Can you elaborate on what the “full time equivalence” provision amounts to? ---
**Author:** ![El\_Zagna](https://avatars.discourse-cdn.com/v4/letter/e/d2c977/32.png) [@El\_Zagna](https://boards.straightdope.com/u/El_Zagna)\ **Post date:** [November 22, 2012, 8:55pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/34 "2012-11-22T20:55:51Z")
Well, so far I’m not seeing anything that would justify massive layoffs either by small businesses or huge corporations. Most small businesses aren’t impacted at all by the bill, and most large businesses already have an insurance plan for their employees. The only problem for any company with an existing plan is whether or not that plan meets the minimum standard. Looking at the previous linked chart the minimum standard is that the plan cover 60% of a typical employees health care costs, and that no employee should have to pay more than 9.5% of their family’s income. I don’t know that much about insurance plans, but that doesn’t strike me as too onerous a standard. Does anyone have any kind of first hand experience on typical insurance plans? ---
**Author:** ![gatorslap](https://avatars.discourse-cdn.com/v4/letter/g/bb73d2/32.png) [@gatorslap](https://boards.straightdope.com/u/gatorslap)\ **Post date:** [November 22, 2012, 8:57pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/35 "2012-11-22T20:57:28Z")
> [@Dr.Strangelove](#): > > Yeah, but that’s not the worst possibility. There are three options, in decreasing order of “goodness”: > > 1. Meet the ACA criteria > 2. Pay the penalty > 3. Fire people until the ACA doesn’t apply > > But huge marginal penalties means that 3 is sometimes preferable to 2. If the penalty isn’t enough that 1 isn’t attractive then you can increase it on a per-person basis, but don’t design the system such that 3 becomes the best alternative. If they’re doing 3 now, they’re a year early. ---
**Author:** ![Modern\_Master](https://avatars.discourse-cdn.com/v4/letter/m/f475e1/32.png) [@Modern\_Master](https://boards.straightdope.com/u/Modern_Master)\ **Post date:** [November 22, 2012, 9:59pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/36 "2012-11-22T21:59:22Z")
First of all, consider the source. It’s a conservative blog, and right now conservatives are blaming Obama for everything. I have yet to find a factually correct conservative blog. Most of them state information without citations for good reason. Wait for it. This is because the citations don’t actually exist. Second, consider their target audience. You can make you’re own inferences from that (mainly because I don’t feel like spelling it out). Bottom line: Take everything you read from conservative sources with a grain of salt, especially a blog. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [November 22, 2012, 10:06pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/37 "2012-11-22T22:06:25Z")
Why do people in this thread think that businesses need an excuse to lay people off? In my experience, they do it whenever they think it benefits them. ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [November 22, 2012, 10:07pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/38 "2012-11-22T22:07:53Z")
> [@Stratocaster](#): > > Why do people in this thread think that businesses need an excuse to lay people off? In my experience, they do it whenever they think it benefits them. For the business of PR, of course. ---
**Author:** ![Mdcastle](https://avatars.discourse-cdn.com/v4/letter/m/958977/32.png) [@Mdcastle](https://boards.straightdope.com/u/Mdcastle)\ **Post date:** [November 22, 2012, 10:20pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/39 "2012-11-22T22:20:00Z")
Whether 9.5% / 60% is a burden depends on how they’re calculated. To use a real example, a major client of ours has a plan with a $3000 family deductible / $6000 family out of pocket max for in network services. Granted such a family would probably have two incomes nowdays, but for the guy that loads the trucks $6000 is probably going to be more than 9.5% of his pay, even more so if out-of-network services, where the maxes double, are included. ---
**Author:** ![BrokenBriton](https://avatars.discourse-cdn.com/v4/letter/b/4bbf92/32.png) [@BrokenBriton](https://boards.straightdope.com/u/BrokenBriton)\ **Post date:** [November 22, 2012, 11:13pm UTC](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685/40 "2012-11-22T23:13:54Z")
At the current 18% of GDP, I’d imagine it’s pretty hard to make things any worse. If anything is costing US jobs, it’s surely the lunacy of burdening employers with all of that employee coverage, while at the same time a whole chunk of citizens go without. The ‘socialized’ world is a whole lot happier - and more competitive - at 8-11% of GDP and full coverage. [Previous page](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685.md?page=1) [Next page](https://boards.straightdope.com/t/is-obamacare-causing-layoffs/641685.md?page=3)