The Affordable Care Act and Businesses
The understanding about the Affordable Care Act (ACA) is that employers of more than 50 people have to provide health care for employees that work 30 hours a week or more. Several large businesses are considering cutting hours to 29 hours a week to avoid this requirement. Others are willing to pay up to a $2,000 a year penalty per employee to avoid health care. (It is too bad that this is not directly paid to employees who must then fund their own health care.) Employers don’t recognize that the ACA will result in reducing the growth rate of increase of the cost of health care, saving all employers money who fund health care.
This article will point out the other costs to employers who choose to avoid paying for healthcare. The employer mandate has been delayed a year in its implementation.
Size of Business Health Care Coverage
Of the over 300 million Americans, 150 million are covered by health care plans at work. 48 million Americans do not have health care. According to an interview on NPR, 95% of businesses with over 50 employees already provide health insurance That leaves 10,000 large businesses nationwide planning to opt out. Another source estimated that 12% of businesses would not comply.
Provisions of the act are complex, but with significant discounts to individuals earning less than four times the federal poverty level, which currently is at $15,510 a year. There are also discounts for employers of less than 25 workers.
Splitting Up the Work Week
I started thinking about this by considering the mathematical problem of how to divide the work week among employees that want or need to work 40 hour weeks, and would work two jobs to achieve that. An obvious solution is for all jobs for such employers to become 20 hour a week jobs, and then each employee would have two jobs. As we will see below, doubling the number of workers has large costs associated with it. Also, workers who should be limited to eight hour days, would have one day a week where they would have to commute to two jobs, which is costly, and interrupts the employers scheduling.
Another possibility is the 3 day, 2 day approach, or the 3-2 plan. This will also be known as the A Team – B Team approach with the first 3 days being the more experienced A Team of present employees, and the next two being the B team of trainees. But without overlap, who will be training them? The managers of course, which will dramatically increase their workload and the complexity of their job.
Businesses probably think that to lower each employee’s work time to less than 30 hours means that they would have to increase their work force to 40 hours/ 30 hours = 4/3, or a 33% increase. We will see the problems of doing this below.
Training
If employers are going to have to increase the number of employees by 33% to 100%, they are going to have to do that right away. That is a real burden on whatever schools they use for training, and on personnel for on-sight training, that are going to fall on experienced employees already reduced to 29 hours a week and looking for and themselves training for second jobs. This has a real cost to the company, as well as anticipated dissatisfaction from customers from poor and slow service. The employees would now not only be disgruntled, but have to learn two different standards and jobs, with less perfection at each.
Merging Schedules
The best and the brightest business school graduates will undoubtedly solve the problem that I couldn’t of how to merge and schedule the workforce into two jobs each. If there is a single business world standard, it would save a vast amount of scheduling problems for each small or major business or franchiser. The interests of the employees will be the last of their considerations, considering that their whole plan is to avoid the expense of giving them healthcare in the first place.
Hiring Pool
Businesses probably think that they alone will be hiring 33% more employees, and their current job applications seem to be proving a wealth of applicants. But imagine when large segments of the business world have to hire between 33% and 100% more employees at the same time. Then you can no longer immediately find those with experience or training in the area of the business. Quite a challenge should be expected. There also may be a block of 40 hour workers who would prefer to work fewer hours, because of age, family, studies, poor health, or other reasons. These people may be content with 20 or 29 hour per week jobs and not be available for the second jobs that businesses imagine they will be seeking. Remember, overall unemployment is only 7.5%, not 33% or higher.
Higher Wages
The above considerations of the limitations of the hiring pool indicate that higher wages will be required, especially as non-covered employees will now need more money to buy their own health care or pay their own penalty for not doing so.
Absenteeism
Employees without preventative healthcare have a higher absenteeism rate, and are in poorer health to do their jobs. It is also more likely that they are going to come to work sick, possibly with communicative diseases, that will affect other workers or customers. One thing I hate is when my food is served or checked out by a worker with a cold or cough. This can not only add to business costs but entirely ruin the reputation of a business
Bad Publicity
Businesses have spent a lot of PR money advertising the quality of their service, the greenness of their business models, and their concern for food safety and concern about nutrition in the food industries. They are now going to have to spend PR money defending their lack of concern for their employees healthcare, especially when it can affect their service and the health of their patrons.
Picketing
Picketing is sort of old fashioned compared to the internet of information discussed below, but it still occurs by seriously inconvenienced and impoverished employees.
Boycotts
A lot of workers are going to be disgruntled by having their hours severely cut, and having to find and work two jobs. It is very unlikely that they or their families would like to patronize other businesses that have similar policies of reducing hours to avoid providing healthcare. In this day of instant ratings and reviews of restaurants and businesses easily available on our cell phones or the internet, this information will be widely disseminated.
Executive Salaries
Businesses are well aware that every time cuts are made or wages held down, the salaries of executives and management are closely examined. By the way, since the managers will be training and supervising up to twice as many employees, as well as dealing with twice as many employee problems, they are going to want sizable salary increases.
The latest data show that the top one percent of salaried employees earn 20% of the total workforce income. The top 10% earn 50% of the the total income. The real wages of the middle class have not increased for decades. When it comes down to basic rights such as the denial of health care that affects the survival and well-being of employees, ballooning executive and management salaries are gross distortions of business ethics.
