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.