Tag Archives: Unintended Consequences

Unintended Consequences


I’m sure this is exactly what Obama had in mind when he urged Americans to support him in passing Obamacare:

United Parcel Service Inc. plans to remove thousands of spouses from its medical plan because they are eligible for coverage elsewhere. The Atlanta-based logistics company points to the Affordable Care Act, or Obamacare, as a big reason for the decision, reports Kaiser Health News.

The decision comes as many analysts are downplaying the Affordable Care Act’s effect on companies such as UPS, noting that the move reflects a long-term trend of shrinking corporate medical benefits, Kaiser Health News reports. But UPS repeatedly cites Obamacare to explain the decision, adding fuel to the debate over whether it erodes traditional employer coverage, Kaiser says.

Rising medical costs, “combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost,” UPS said in a memo to employees.

This is exactly what Pelosi meant when she mentioned that we should pass this bill so that we can see what’s in it.

This Is Obama’s Economy

Barack Obama

The United States is experiencing job growth, to be sure.  But look at the kinds of jobs being created:

(Reuters) – U.S. businesses are hiring at a robust rate. The only problem is that three out of four of the nearly 1 million hires this year are part-time and many of the jobs are low-paid.

Executives at several staffing firms told Reuters that the law, which requires employers with 50 or more full-time workers to provide healthcare coverage or incur penalties, was a frequently cited factor in requests for part-time workers. A decision to delay the mandate until 2015 has not made much of a difference in hiring decisions, they added.

“Us and other people are hiring part-time because we don’t know what the costs are going to be to hire full-time,” said Steven Raz, founder of Cornerstone Search Group, a staffing firm in Parsippany, New Jersey. “We are being cautious.”

Raz said his company started seeing a rise in part-time positions in late 2012 and the trend gathered steam early this year. He estimates his firm has seen an increase of between 10 percent and 15 percent compared with last year.

Other staffing firms have also noted a shift.

“They have put some of the full-time positions on hold and are hiring part-time employees so they won’t have to pay out the benefits,” said Client Staffing Solutions’ Darin Hovendick. “There is so much uncertainty. It’s really tough to design a budget when you don’t know the final cost involved.”

Watch the word from the Left as they mention “anecdotal”

Obamacare: Part Time Worker Factory

Health Care

There are no solutions, only trade-offs.

Nearly all of the remaining provisions of the new health care law go into effect next January, including one that requires businesses with 50 or more full-time employees to pay for their health care or pay a penalty.

Some businesses may already be making personnel changes to save money when that provision of the Affordable Care Act kicks in. One option on the table: shifting full-time workers to part time.

Duane Davis thinks that’s what happened to him. He’d probably still be stocking clothing at the Juicy Couture store in New York City if he still got 30 to 40 hours a week of work like he used to. The work environment “was very cool,” he says, and he liked his co-workers.

But Davis quit because he couldn’t get enough hours. If he’d stayed and worked 30 or more hours a week, he would have been eligible for employer-paid health care starting next year. But earlier this year, Davis says, he was told he could work no more than 23 hours.

And the math is simple:

Rob Wilson, president of the temp agency Employco, says he’s observing similar shifts happening across his business.

“We’re seeing it quite a bit,” he says. “Instead of saying, ‘I want one person for 40 hours a week,’ [employers are saying], ‘I’ll take two people for 20 hours or 25 hours a week.'”

Wilson says the health care issue is also reshaping his own business. A typical temp working full time makes a gross profit of about $3,000 a year for Employco. But the cost to insure that person would come to $2,900.

That means just $100 in profit per employee before he advertises or pays his recruiters and his payroll department. “You can’t survive on $100,” Wilson says, “so you really have to pass that cost on.”

In other words, Wilson will have to charge his clients more — if they are willing to pay. And from his perspective, this basic math adds up to a big labor market problem. “Your underemployed population in America is just going to go up dramatically,” Wilson predicts.

I don’t doubt the intentions of liberal agendas, I just doubt their success.

Another Company Cuts Hours

Yesterday I posted about an IT firm cutting hours as a result of the economic conditions ahead.

Hours were going to be cut.  Instead of a 5-day work week the schedule would now be built around a 4-day work week.

My suspicion is that the firm is targeting a work week that comes in under 30 hours a week.

Well, there is a company that is making no bones about it:

A fast-food chain is slashing employee hours so franchise owners don’t have to pay health benefits. Around 100 local Wendy’s workers have learned their hours are being cut. A spokesperson says a new health care law is to blame.

The penalty for failure to offer insurance is $2,000 per employee.  In this case, $200,000 is a lot of money:

The company has announced that all non-management positions will have their hours reduced to 28 a week. Gary Burdette, Vice President of Operations for the local franchise, says the cuts are coming because the new Affordable Health Care Act requires employers to offer health insurance to employees working 32-38 hours a week. Under the current law they are not considered full time and that as a small business owner, he can’t afford to stay in operation and pay for everyone’s health insurance.

The irony, of course, is that fast food chains typically employ the younger worker.  Folks who might be entering the job market for the first time and are learning valuable work skills.   Skills that they may not otherwise acquire.  And the reason they are being impacted is a law that attempts to help provide medical care to the population.  Well, these kids are the healthiest segment OF that population.


Managing Hours Worked In 2013

A buddy of mine works in IT.  The firm is a medium sized outfit; well over 50 employees.  Heading into the New Year they were pulled into a meeting.  The news?

Hours were going to be cut.  Instead of a 5-day work week the schedule would now be built around a 4-day work week.

Good news indeed if time is more valuable than dollars.  However, at some point, to most people, some number of hours are less important than dollars and so it is that we wake up each morning to go to work.  And apparently the folks at this company are a titch uncomfortable with the new schedule.

My immediate thought was that the employer was trying to dodge the new health care rules coming in 2014.  Further questioning seemed to confirm my suspicion.  And what rules are those?

Many businesses plan to bring on more part-time workers next year, trim the hours of full-time employees or curtail hiring because of the new health care law, human resource firms say.

Under the Affordable Care Act, businesses that employ at least 50 full-time workers — or the equivalent, including part-time workers — must offer health insurance to staffers who work at least 30 hours a week. Employers that don’t provide coverage must pay a $2,000-per-worker penalty, excluding the first 30 employees.

The so-called employer mandate to offer health coverage doesn’t take effect until Jan. 1, 2014. But to determine whether employees work enough hours on average to receive benefits, employers must track their schedules for three to 12 months prior to 2014 — meaning many are restructuring payrolls now or will do so early next year.

About a quarter of businesses surveyed by consulting firm Mercer don’t offer health coverage to employees who work at least 30 hours a week. Half of them plan to make changes so fewer employees work that many hours.

Elections have consequences.  There are no solutions, only trade-offs.  And the trade off for this health care bill?

The health care law will particularly affect companies with 40 to 45 workers that plan to expand and hire. Many are holding off so they don’t cross the 50-employee threshold, says Christine Ippolito, principal at Compass Workforce Solutions, a human resource consulting firm in Melville, N.Y.

Others already over the 50-employee threshold plan to add more part-time workers or cut the hours of full-timers, says Rob Wilson, head of Employco, a human resource outsourcing firm. Many, he says, will hire more temporary workers, whom they won’t have to cover.

Nearly half of retailers, restaurants and hotels will be affected by the law, according to Mercer. They employ large numbers of part-time and seasonal employees, including many who work about 30 hours a week.

Since such low-wage workers are widely available, it often hasn’t been cost-effective or necessary for employers to offer them coverage. Providing them benefits could be costly because employees must pay no more than 9.5% of their wages in insurance premiums, forcing employers to contribute significantly more than they do for higher-wage workers.

“I think you may see employees with fewer hours as a consequence,” says Neil Trautwein, vice president of the National Retail Federation.

Thirty-one percent of franchisees surveyed recently by the International Franchise Association said they plan to pare staff to get under the 50-employee threshold.

This is a direct response to the legislation that was pushed by the President.  This isn’t a long-term consequence to a policy shift.  Rather, the slow down in hiring, the shift to more part time workers is a rational response to an agenda pushed by Obama.


Race Relations: Unintended Consequences

Much progress has been made in race relations in the last generation.  And,, I suspect, more progress will YET be made as my children have children.

It’s the nature of human nature.  We adjust, albeit slowly, to injustice and build a more noble character.

But sometimes the simple and slow march of time isn’t satisfying enough.  We find that we must do more.  And do it now.

So, well, so we do.  And we sometimes find that what we get isn’t what we want.

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The End of Free Market: Minimum Wage?

Recent analysis of changes to Hong Kong are getting press in the Economist.   A new law is going to be passed setting a wage floor in Hong Kong.  For years, the city has managed to grow, thrive even, without the common law known as Minimum Wage.

The legislation is set to impose a minimum wage between $3.00 and $4.00 American.  Not much by our standards, but then again, perhaps our standards are a bit exaggerated.

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