Employers are responding to the uncertainty of the Obamacare rollout by slashing hours and limiting their new hires.
Although the Obamacare employer mandate will not take effect until next year, employee health insurance premiums have already skyrocketed. And surveys report that many business owners are making changes based on Obamacare in terms of employee hours and hires.
Federal Reserve banks have heard the same concerns. The Federal Reserve recently released its January Beige Book, which “gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources.” The Beige Book finds businesses repeatedly stating that Obamacare and rising health care costs have held back the labor market:
- Atlanta Fed: “On balance, many firms expressed continued hesitancy caused by concerns about healthcare reform in terms of their overall hiring plans” (p. VI-3).
- Richmond Fed: “Employers continued to express concern about potential cost increases related to [Obamacare]” (p. V-4).
- Chicago Fed: “Non-wage labor costs also increased, with a number of contacts reporting higher healthcare premiums” (p. VII-3).
- Boston Fed: “Downside risks include the upcoming costs to businesses of compliance with [Obamacare] and the trend toward office downsizing on a space-per-person basis” (p. I-3).
- Philadelphia Fed: “Firms also expected to see the largest increase in health benefits costs compared with other input and labor costs in 2014” (pp. III-1 and III-2).
- Cleveland Fed: “A majority of our contacts cited rising healthcare insurance premiums as a concern” (p. IV-2).
Obamacare has substantially increased the cost of doing business. That ultimately hurts current workers—especially job seekers—by making businesses more cautious about hiring new employees.
Jacob Deveney is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.