4th January 2013
Smaller businesses with at least 50 full-time employees may choose to opt out of providing health insurance completely, since the penalties are less costly than the insurance itself. Many employers, however, will likely choose to fire some full-time workers and/or drop workers to permanent “part-time” status, in order to be under the magic number of “50” full-timers. In fact, some economists believe that the health reform law will create a high level of competition among part-time workers. In addition, the cuts of entire full-time positions and reductions to part-time will likely produce some significant negative effects.
First, those full-time employees whose positions have been entirely cut will be unemployed and in need of unemployment benefits. Unless you are Nancy Pelosi and believe that unemployment benefits are a great economic stimulus, suffice it to say that more people on unemployment means less economic growth and less tax revenues paid on income.
Those workers reduced to part-time status will obviously have less income and, therefore, be able to spend less, and perhaps not be able to keep their homes. These workers will then also be among the “underemployed,” Americans who never seem to be considered when the unemployment rate is published. As the number of part-timers increases, the unemployment rate stays the same. Funny how that works.