Wednesday, November 28, 2012

ObamaCare Update: Look Out for Layoffs, Business Decline

Shortly after Nov. 6, Zane Tankel, who runs 40 Applebee’s restaurants in the New York City area, announced that his company was freezing employment and would not build any new restaurants. President Obama’s re-election, Tankel explained, meant that ObamaCare was likely to be fully implemented, costing his company millions of dollars and significantly raising the cost of hiring a worker.

Tankel’s statement prompted outrage and threats of a boycott, but he was far from alone. Already John Schnatter, CEO of Papa John’s Pizza, has announced that he would likely lay off some workers. Earlier, Schnatter said that ObamaCare would cost his business $5 billion to $8 billion annually, forcing him to increase the price of pizzas.

Meanwhile, two other restaurant chains, Olive Garden and Red Lobster, are moving many of their employees from full- to part-time work in order to avoid the law’s mandate that anyone working more than 30 hours must have insurance. An owner of 40 Denny’s in Florida, meanwhile, says he’ll add a 5% surcharge to customer bills in 2014 to cover his increased costs.

While restaurants, with traditionally low profit margins and large numbers of low-skilled, low-wage workers, are exceptionally vulnerable to ObamaCare’s costs, other business are being hit too. For example, Boston Scientific has announced that it will now lay off up to 1,400 workers and shift some jobs to China.

And Dana Holdings, an auto-parts manufacturer with more than 25,000 employees, says it to is exploring ObamaCare-related layoffs.

These, and countless other employers across the country, are not doing an impression of Montgomery Burns. They are simply responding to economic reality.

Under ObamaCare, employers with 50 or more full-time workers must provide health insurance for all their workers, paying at least 65% of the cost of a family policy or 85% of the cost of an individual plan. Moreover, the insurance must meet the federal government’s requirements in terms of what benefits are included, meaning that many businesses that offer insurance to their workers today will have to change to new, more expensive plans...

Overall, according to the Congressional Budget Office, ObamaCare could end up costing as many as 800,000 jobs.

The election showed us that ObamaCare is likely to be with us for quite some time. Unfortunately, a great many workers are about to find out the consequences of that decision.

("The 49ers: How ObamaCare will keep unemployment high -- by forcing small companies to cut their workforce to fewer than 50 people." by Michael Tanner. New York Post.)