Why Obamacare Kills Jobs

Some are puzzled that, even though the recession ended in June 2009, the national unemployment rate has remained above 8 percent for over three years.

A major culprit is the $2,000 per worker employer penalty in Obamacare, effective in 2014.  The penalty falls on employers who do not provide the right kind of health insurance, and, naturally, it discourages hiring.

That’s one reason why one of my first actions as president will be to repeal Obamacare.

Obamacare is based on Romneycare.  In 2007, on Meet the Press, then-Governor Romney defended mandates and encouraged President Obama to copy his Massachusetts mandate model.  Romney said, “Those who follow the path we pursued, will find it’s the best path. And we’ll end up with a nation that’s taken a mandate approach.”

Governor Romney has yet to distance himself from Romneycare.  In fact, he’s been proud to highlight and defend it as a major accomplishment for the state of Massachusetts.  Defending mandates is a strange position to take for a supposed “Republican” but it’s even stranger when you consider exit polls in the Massachusetts primary show that 51% of conservative voters in Massachusetts believe that RomneyCare “goes to far.”

I believe top down government takeovers of healthcare are wrong at every level – state or federal.  

I am proud to have consistently stood against the individual mandate, as well as the employer mandate to offer health insurance or pay a fine.

This belief in government knows best is exactly why Obamacare is so damaging to business.

Obamacare’s penalties on businesses in this country not only slows growth, but penalizes businesses who are successful and want to hire more workers. Beginning in 2014, companies with 50 or more workers will be required to offer a generous health insurance package, with no lifetime caps and no co-payments for routine visits, OR pay an annual penalty of $2,000 for each full-time worker. 

Businesses with 49 or fewer workers don’t have to pay the penalty.  

Illinois has seen first-hand how ObamaCare kills jobs and hurts the manufacturing sector. John Deere and Caterpillar, both Illinois-based companies, are the two largest makers of heavy equipment in the United States and both have publicly stated that ObamaCare will cost each company more than $100 million in compliance costs. Those increased costs will inevitably lead to fewer jobs in Illinois by major employers in the state just as with mid-sized businesses.

If a business grows by one worker, from 49 to 50, that one worker increase will cost a small business $40,000 per year if it doesn’t have the right kind of health insurance.  

So a 50-worker firm will pay $40,000.  A 51-worker firm will pay is $42,000.  But a 49-worker firm pays nothing.

Basically, under Obamacare, if you grow, you will be punished.  That’s un-American.

But the largest dis-incentive could be this: Congress decided that businesses would not pay the penalty on part-time workers.  So if a firm lays off full-time workers and substitutes them with part-time workers, it can avoid paying the $40,000 per year.

In February over 8 million people were working part-time because they could not find full-time jobs.  The new health care law would make this worse

This penalty especially raises the cost of employing low-skill workers at minimum wage because employers cannot reduce the wage to make up for the penalty.

Small businesses that offer the greatest opportunities to entry-level workers — leisure and hospitality, restaurants — will be particularly hard-hit.

Many Americans will see their smaller paychecks because of the penalty, as employers lower their wages to make up for the new penalty.

When a business owns and operate multiple locations, such as several Dunkin Donuts, or two Dunkin Donuts and three Jiffy Lubes and two H & R Blocks, these businesses are treated as one company for purposes of Obamacare. Undoubtedly, if you own several small businesses you have more workers – and remember, there is no incentive to grow past 50 workers, because of the government penalties.

Employers will prefer to hire part-time workers, who will not be subject to the penalty – that means fewer stable good paying jobs and slowed or no economic growth. This particular penalty isn’t the only one – there are more.  And I believe that the Obamacare penalties are a major reason that employment growth has been slower than usual during this economic “recovery.” 

That’s why Obamacare, based on Romneycare, has to go.

Rick Santorum, a former representative and senator from Pennsylvania, is a candidate for the Republican nomination for president.  

  1. Doc Stephens
    Douglas

    Doc Stephens:

    Senator,

    You should know there is a very big difference between a state requiring private health insurance and the federal government monstrosity known as ObamaCare

    The only difference is one of scale. Wrong is wrong, whether it’s enacted at the federal or state level. · 5 hours ago

    Not according to the Tenth Amendment of the U.S. Constitution. 

    The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

    The duly elected government of the people of MA enacted a law that requires the purchase of private health insurance.  As a conservative, I strongly support their right to enact such laws.  For an analysis of the differences between ObamaCare and MACare you should read an article written last May by David French at this link:

    http://www.patheos.com/Resources/Additional-Resources/Mitt-Romneys-Health-Care-Advantage-David-French-05-17-2011?offset=0&max=1

    I think you will find that ObamaCare is wrong, while MA Health Reform was actually just what the doctor ordered for MA.

  2. ctlaw
    James Gawron: Senator,

    Yes, yours is is a fundamental point that is vastly underrated.  Probably the major wall to employment for the lowest paid workers in this country is the cost of health insurance to the employer.  This results in illegal employment, illegal immigration and cronic underemployment.

    Regards,

    Jim · 9 hours ago

    Followed by other government-imposed costs such as unemployment insurance, risks of discrimination lawsuits for discharging an employee, risks of ADA/FMLA complaints, paperwork compliance costs…

    Think about an employer looking to fill 10 entry level positions at $10/hr wage. The combined wage costs (~$200k/year w/o overtime) are very small relative to other costs. Especially if you are inclined to take a risk on someone without a proven record, the other risks are severe. You may have to hire 15-20 people to ultimately fill those positions. Imagine a 1 in 20 chance (per hire) of being hit with a lawsuit that costs you $200k and a 1 in 10 per hire chance of being hit with some administrative audit that costs you $20k. The expectation value of those costs can rival the total wages.

  3. Cal Lawton

    Liberty, Senator, maybe one day you could try talking about that.

  4. Yeah...ok.

    Sir, you are preaching to the choir.

  5. CuriousJohn

    crmu.jpgSir,

    Thank you for spending the time, energy and effort in this fight.  As a TEA Movement member (FYI, I don’t like the “Party” tag). I fall into the group that doesn’t trust Mitt and you don’t seem to speak for me, you’re a bit to righteous for my liking. However, I will vote for either of you because the Dear Leader needs to be stopped.  But deep down I’m hoping on a Tampa convention that finds someone else to carry the GOP banner.

  6. Crab bait

    Yes he is preaching to the choir but I’m not even certain that he’s going to read your response else why choose such a safe topic on a sympathetic website.  My questions are why attack Romney?  Dragging him down doesn’t raise Santorum up. 

    Yeah…ok.: Sir, you are preaching to the choir. · 22 minutes ago

    Also, how is a tax two years from now effecting today’s unemployment, as opposed to all of the big government programs Sen. Santorum voted for while he was a legislator.

  7. Joe Escalante
    C

    Thanks Senator,

    I built a business into a 17 employee enterprise grossing 3 million in good years. It was music based so it downsized to 2 employees. I could start another non-music based business and do it again but I wont because of the uncertainties like Obamacare. I might think about it in Texas but I wouldn’t do it here in California.

  8. Mama Toad

    Crab bait — In what way is pointing out Romney’s weakness over the similarities between the Massachusetts model and the federal model “attacking” Romney? 

    Mr. Santorum wants to be president of the United States. He believes he is the best man for the job. I don’t want to see him making ad hominem attacks, but I sure as shootin’ want him to fight and fight hard for the job… and part of that is pointing out his opponent’s weaknesses. Don’t be too thin-skinned, please.

  9. CuriousJohn

    Joe is keeping his powder dry, like the rest of the American-Businessmen.  When its time to use the powder, you are going to see investment like its never been seen before.

    Joe Escalante: Thanks Senator,

     I could start another non-music based business and do it again but I wont because of the uncertainties

  10. Douglas
    Doc Stephens

    Douglas

    Doc Stephens:

    Senator,

    You should know there is a very big difference between a state requiring private health insurance and the federal government monstrosity known as ObamaCare

    The only difference is one of scale. Wrong is wrong, whether it’s enacted at the federal or state level. · 5 hours ago

    Not according to the Tenth Amendment of the U.S. Constitution. 

    The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

    Just because the 10th reserves to the states more power doesn’t mean that if the state does it, it’s good. 

  11. Frozen Chosen

    Careful, senator, you’re jeopardizing that cabinet position in the Romney administration!

  12. James Gawron

    Senator,

    Yes, yours is is a fundamental point that is vastly underrated.  Probably the major wall to employment for the lowest paid workers in this country is the cost of health insurance to the employer.  This results in illegal employment, illegal immigration and cronic underemployment.

    A system that only raises Health Care costs through a cumbersome bureaucracy is not a cure but more disease.  Something as simple as a tax credit tied to a Health Savings Account would do more to help the poor worker and do more to help the employer hire more poor workers than the absurdity of ObamaCare.

    Regards,

    Jim

  13. Leporello
    Cal Lawton: Liberty, Senator, maybe one day you could try talking about that. · 1 hour ago

    Cal, I’m surprised at your comment.  Santorum talks about freedom every day.  ”Freedom” is even one of the three key words in his slogan.

  14. Leporello
    Douglas

    Doc Stephens

    Douglas

    Doc Stephens:

    Senator,

    You should know there is a very big difference between a state requiring private health insurance and the federal government monstrosity known as ObamaCare

    The only difference is one of scale. Wrong is wrong, whether it’s enacted at the federal or state level. · 5 hours ago

    Not according to the Tenth Amendment of the U.S. Constitution. 

    The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

    Just because the 10th reserves to the states more power doesn’t mean that if the state does it, it’s good.  · 14 minutes ago

    Exactly.  Let’s not confuse constitutionality with wisdom.

  15. R. Craigen

    It helps when the preacher chimes in with a strong voice because he helps the choir stay on tune.

    Rick, you’re always welcome at Ricochet.  I’m personally a Canadian conservative but deeply interested, as I’m sure you understand, in the U.S. outcome this year.  I confess to being a strong Gingrich booster, but I’d be more than content with a Santorum candidacy.  I’m sure you needn’t be told that we are engaged in an ideological battle we didn’t start, but we simply cannot afford to lose this time around.

    Stand, men of the West.

  16. George Savage

    Senator, many thanks for pointing out the powerful cumulative effect of marginal disincentives to work, hire and invest.  Many such are at work throughout our economy today:  Obamacare raises the cost of hiring full-time workers; EPA’s war on coal increases the cost of electricity; obstruction of oil drilling and fuel pipeline construction increases the cost of gasoline; and the expectation of higher taxes scheduled in current law leads businesses to defer capital investment.

    As you know, in 1981 Ronald Reagan flipped this picture around by increasing marginal incentives to work, hire and invest.  The result was an unprecedented decades-long economic boom.  

    I hope you get the opportunity to implement the same proven policies.

  17. Doc Stephens

    Senator,

    Thanks for clearly documenting your lack of understanding of health care reform in MA.  You should know there is a very big difference between a state requiring private health insurance and the federal government monstrosity known as ObamaCare.  Why did you endorse Mitt Romney in 2008 and even applaud his efforts as Governor if you have been so consistent in your opposition?  Perhaps you should spend more time telling us why you warrant our support, and less time making up wild and crazy allegations about your opponents.  It’s not very presidential. 

  18. Douglas
    Doc Stephens: Senator,

     You should know there is a very big difference between a state requiring private health insurance and the federal government monstrosity known as ObamaCare

    The only difference is one of scale. Wrong is wrong, whether it’s enacted at the federal or state level.

  19. James Of England
    Rick Santorum:

    Obamacare is based on Romneycare.  In 2007, on Meet the Press, then-Governor Romney defended mandates and encouraged President Obama to copy his Massachusetts mandate model.  Romney said, “Those who follow the path we pursued, will find it’s the best path. And we’ll end up with a nation that’s taken a mandate approach.”

    This is a simply dishonest characterization of Romney’s words. To quote from the Meet The Press interview transcript:

    MR. RUSSERT:  So if a state chose a mandate, it wouldn’t bother you?

    GOV. ROMNEY:  I, I, I think it’s a terrific idea.  I think, I think you’re going to find, when it’s all said and done, after all these states that are laboratories of democracy get their chance to try their own plans, that those who follow the path that we pursued will find it’s the best path, and we’ll end up with a nation that’s taken a mandate approach.

    There is no sense in which he was addressing President Obama, or even candidate Obama, and the subject is state laws, which, taken together, characterize the nation.

  20. James Of England
    Rick Santorum:

    That’s why Obamacare, based on Romneycare, has to go.

    Putting the Romneycare bits to one side, if Mitt had written this same piece, almost the entirety of the response would be about how he was merely looking at it from a budgetary perspective and not from the perspective of liberty. I don’t think that’s true of Mitt, and I don’t think it’s true of Senator Santorum, but I do think it’s worth keeping this piece in mind next time Romney’s complaint about an Obama policy is groundlessly taken to be an exclusive list of complaints.