Employer Mandate Will Keep Small Businesses from Hiring

Dec 10, 2012

Employee Amy Merritt prepares a flower arrangement at Flowers By Julia in Princeton, IL. Photographer: Daniel Acker/Bloomberg.

It’s good to see the USA Today editorial board acknowledging the reality that “Yes, the employer mandate will add to some companies' costs of doing business, and those costs no doubt will be passed along to customers.” It’s too bad they still support it. Maybe it would help if the board also acknowledged that by raising the costs of employees to businesses, the mandate puts millions of jobs at risk.

As a counterpoint to the USA Today editorial, National Federation of Independent Business President and CEO, Dan Danner, points out that the employer mandate will give small businesses an incentive to not create jobs:

Smaller businesses, too, might be forced to reduce employment below the 50 full-time equivalent employee threshold, or resist growing above the threshold, to avoid the mandate. None of these options is productive, and they ultimately harm employees and the economy. Replacing one full-time position with two part-time positions is not job creation. Further, money that must go toward increased benefits or non-tax deductible penalties will crowd out wage increases and business investment.

It makes no sense to put up obstacles to hiring when unemployment is at 7.7%. Instead, Congress should work on effective health care reforms that expand coverage, lower costs, and improve quality while not hindering job creation.

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