A Law Went Quietly Into Effect January 1

The American Spectator posted an article today about a law that quietly went into effect on January 1, 2016.

The article reports:

One of the worst of Obamacare’s ill-conceived provisions went quietly into effect on January 1. The employer mandate, previously inflicted only on businesses with 100 or more employees, will now be imposed on those with as few as 50. This mandate will prevent countless small employers from hiring workers they would otherwise have hired and incentivize many others to replace full-time employees with part-timers. It is such an obvious job killer that the Obama administration delayed enforcement until after the 2014 midterms, the liberal Urban Institute has called for its repeal, and it has even been obliquely criticized by Hillary Clinton.

The employer mandate requires all businesses with 50 or more full-time employees to provide health coverage to at least 95 percent of these employees as well as any dependents they may have under age 26 — or pay crippling fines. But not all small employers can afford to offer insurance. Those which lack the resources to do so will avoid the mandate by assuring that the number of full-time workers they employ remains below 50. And, because Obamacare has arbitrarily redefined “full-time” to mean 30 or more hours per week, the employer mandate effectively caps both the number of workers many businesses can hire and how many hours they will work.

As someone who spent most of my working career working for small businesses, I can state from personal experience that small companies are very aware of government regulations and how to avoid them. One way to get around this rule is to keep the size of a company under 50 employees–this impacts unemployment–companies that might want to hire additional people will not hire them because they want to avoid coming under the employer mandate. The other way to get around this is to use contract workers that are self-employed and do not receive any company benefits, but there are very strict rules governing contract workers, and they are not practical for every business. Either way, the employer mandate is going to have a chilling impact on hiring. The labor force participation rate has been dropping consistently during the Obama Administration. The employer mandate will cause it to drop further. Bringing companies of more than 50 employees under the employer mandate will not be a good thing for the economy.

The article further reports:

Ironically, considering that the question came from an obvious audience plant, Mrs. Clinton got it wrong on the Family and Medical Leave Act. FMLA eligibility isn’t based on full time or part time status. And she also seems unaware that an employee can work fewer than 40 hours per week and still be considered full-time in the brave new world of Obamacare. But the most telling part of her answer was her use of the word “believe.” Playing off the questioner’s placement of the FMLA issue in the realm of “discrimination,” she implied that employers who are simply following federal law are in reality just crooks who want to deny benefits to their workers.

She was clearly waiting for that question and the opportunity to suggest that, as President, she would work to fix the “unfortunate incentives” created by Obamacare. However, considering that Hillarycare included an employer mandate, and that it was an integral part of the health care reform plan she offered the last time she ran for President, it’s extremely unlikely that she would follow the eminently sensible policy recommended by the authors of the Urban Institute report: “In summary, eliminating the employer mandate would eliminate labor market distortions in law, lessen opposition to the law from employers, and have little effect on coverage.”

Is there anyone in the Obama Administration that understands basic economics and business?