The U.S. Chamber of Commerce recently released its presentation of findings on how the Affordable Care Act will negatively impact small businesses.
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“The decision‐makers report that the ACA has already resulted in higher costs and fewer full‐time positions. When fully implemented in 2015, the survey results suggest the ACA employer mandate will result in fewer employers providing healthcare,” reads the report.
Public Opinion Strategies from Sept. 25 through Oct. 18 conducted the report, surveying 208 decision-makers in franchise-owned businesses and 206 decision makers in non-franchise-owned businesses.
Stephen Bienko, owner of College Hunks Hauling Junk and Moving, understands how his small business will be affected by Obamacare. Bienko recently testified on Capitol Hill about how Obamacare will affect his business’ future.
Nelson: The U.S. Chamber of Commerce reported that 64 percent of business-decision makers in franchise-owned businesses and 53 percent of non-franchise-owned businesses say the Affordable Care Act will have a negative effect on their business. Do you agree with these statistics as they relate to your own business. And, if so, why?
Bienko: I agree 100 percent on those statistics. As it relates to mine personally, you know, small-business owner — successful ones plan ahead. The mandate — the employer mandate — most business owners understand that it’s only going to get worse …
So, planning ahead: You are already No. 1 on the financial sector, you’re thinking about what the impact is going to have a year from now and are planning now so the impact is not as drastic.
It’s the same thing in my industry, moving storage and warehousing, our worker’s compensation is extremely, extremely high in my industry. So, what you do is that you plan ahead, getting ready — if you’re on a growth pattern like I am — you have to plan ahead because you’re going to get audited at year’s end and, during that audit, you’re going to have a massive, massive increase, and they’re going to request all paid-in-full at the end of the year. Normally, it’s tens, tens and tens of thousands of dollars; so, you have to plan that far ahead as a small-business owner.
And that’s what most business owners are currently doing, because the failed — the employer mandate — is possibly going to hit them hard. They’re already being affected and making changes because of it.
Nelson: When the Affordable Care Act goes into full effect in 2015, how many of your workers will be cut from full-time to part-time?
Bienko: Right now, we have 30 to 35 percent current part-time employees — as we see, culturally, what a part-time employee is right now. The drastic difference is that within Obamacare — the Affordable Care Act — they are changing the consideration of what a full-time employee is. A full-time employee has always been 40 hours and is now dropping to 30 hours per week for them to be considered a full-time employee.
So, with that, knowing the considerations a small-business person, as we consider, a part-time employee. So — right now — we have about 30 to 35 percent part-time employees who are working 30 to 36 hours.
Now, that number is going to double because we are going to have to make a shift in how we are viewing the amount of hours our employees are working because of the affordability and budgeting.
Nelson: How will these cuts affect your business’ potential for growth?
Bienko: Well, first of all, most importantly, it’s going to drastically affect the wallets of the part-time workers. And that is the most hurtful thing that is going on and what keeps a small-business owner up at night.
In order to have a business operate, run and grow, you have to be mindful of the budget, and you have to be very mindful of your labor costs. Unfortunately, being mindful of that sort of betterment of the entire company is making cuts to your employees’ hours. And, with that, it’s going to have a drastic cultural effect, No. 1, on the amount of hours we are able to offer employees. We may be able to hire more employees. We will have to hire more employees because we are going to need more part-time employees.
However, those employees are going to have less money in their wallets — which, in effect, is going to lead to less educated and less trained employees, because when the hours are reduced, you make it a lower rate of employing, number one, and when the employees are currently on your staff, they have less training because they are being cut by about 10 hours per week, which is 10 hours of on-the-job training per week they don’t have.
And then when we increase part-time employees, we have a lower grade of trained employees because they all are having less hours of on-the-job training which, in my eyes, is going to take me to a steeper curve on my growth pattern because I only grow when I have fantastic, well-trained, excited and motivated employees. That’s what promotes my growth and enables us to say, “Let’s open a new location because we have a flock of highly trained, motivated employees — team members — who are going to make that new place run.” That, for us, is going to take a much steeper climb on the hill which will delay our growth.
Nelson: According to the U.S. Chamber of Commerce report, large chunks of decision-makers say the employer mandate will mean they will drop healthcare coverage, opting instead to pay a penalty for each full-time employee. How will the employer mandate affect your employees and business, knowing that?
Bienko: Sure. Well, we have not done sufficiently yet, but it’s been on the conversation with our CFO on whether or not to accept a penalty. Our direct cost per employee is $4,800 per year of our contributions to our health coverage for them. With the mandate, [the per-employee penalty] reaches to $2,000 … So, that’s a numbers game.
However, we are a very culturally based company. And, we are going to come under some tough circumstances to decide, at the particular time, what is truly our best option. Is to pay a penalty, which sounds so un-American — No. 1? That’s just not how I was brought up as a person — just, you know, accept the penalty and just do something that you’re not supposed to do, which is pay a penalty. That sounds pretty un-American to me. However, when you’re looking at your small business, and that’s the option I’m given, do I double or more than double my monthly and yearly payments or costs, or do I just play a game and take a penalty and do something you’re not supposed to do?
It’s difficult.
And the issue is it’s that, you know, here we are as a small business in America. And a small business in America is one of the biggest freedoms we’re given. And now we’re being controlled and mandated by our government. That is one area that is going to drastically slow down the economy’s scale of growth of small businesses.
Nelson: The majority of respondents/employers in the U.S. Chamber of Commerce report say this is a bad law for those who offer health insurance to their employees (68 percent franchise and 91 percent non-franchise). Do you agree with their assessment. If so, why?
Bienko: Well, first of all, we do need a change in our national healthcare. We do need to figure out “How are we going to reduce healthcare costs?” Hands down, this is a bad way of going about it.
So, this is a bad law. This is a law that directly impacts small businesses. And, at the end of the day, it’s a law that’s aimed at small-business employees, which is, a high majority of employees in the nation. It’s a drive to make those small-business employees dependent upon the government instead of being dependent on their employers. At the end of the day, small businesses are the driving force — the ones that truly care about their local communities, the local employees and truly want what’s very best for them. That’s proven throughout American history. That’s what small businesses are about. And [ACA] is placing the dependency of those small-business employees and placing them into the lap of the government.
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