ObamaCare is, as any massive and hurriedly constructed government power grab is, fraught with the potential for unintended consequences. As this report explains, small businesses may have every incentive to stay small:
For critics, one of the most troubling aspects of the laws is the fines. Massachusetts has already fined more than 1,000 companies over $18 million for failing to offer medical insurance to their workers. … Such penalties make Doug Newman, owner of Newman Concrete Services in Richmond, Maine, nervous. In the past 18 months, as the economy battered the construction industry, Newman’s work force shrunk from 125 employees to just 25.
He is worried that once the economy turns and he begins to hire back workers, he’ll face a critical decision when he nears the 50-worker mark and is no longer exempt from penalties. Newman now pays 60 percent of his employees’ individual premiums and 40 percent of their family premiums.
“The 51st employee could mean $100,000 in costs. I’ve been calling it the concrete ceiling,” he said. “No employer is going to hire No. 51 if it brings all these mandates down on you, because they’re pretty onerous.”
Every small-business owner will make a similar calculation, and the obvious conclusion for most will be to forgo crossing the 50-employee threshold unless they absolutely need to and are confident of covering the marginal cost of that 51st employee. Mind you, this is at a time when the administration is engaged in massive head-scratching over how to promote job growth. Hint: don’t make it phenomenally expensive to hire that 51st worker. Perhaps if the administration had fewer political consultants and academics and more entrepreneurs they’d think about the impact of their historic handiwork. Small-business owners certainly are:
Don Day is also worried. Day owns eight small businesses in McKinney, Texas, including two restaurants, a boutique hotel and several retail shops. Although he employs 125 workers, he offers health care for just a few key employees. Just an extra $200 a month per employee for health care could set him back hundreds of thousands of dollars a year — a cost he can’t afford. “It’s not just me, it’s every small business across this land,” he said. “A lot of small businesses are going to go out of business.”
Henry Waxman will no doubt start dragging such nonbelievers in front of his committee to excoriate them for their negativity. But one hopes that saner heads will eventually prevail in Washington as ObamaCare begins to take its toll on the people and businesses that invest, hire, and create wealth in this country.