Obamacare Hurts Small Business Hiring

Monday, 24 Jun 2013 12:56 PM

By Herman Cain

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Here’s today’s least surprising piece of news. A Gallup poll shows that 41 percent of small businesses say they’ve frozen hiring because of Obamacare.
 
Well of course!
 
If there’s one thing small businesses must do at all times, it’s to control costs. There is a simple reason for this: Your typical small business, with its limited capacity for output and marketing, can only generate so much revenue.
 
There are obviously impressive exceptions who come up with brilliant concepts and rake in the bucks, but for most small businesses, the limits of time and resources to devote to production capacity mean you can only take in so much money.
 
That means that penny of cost that you add to your overhead will eat into your already limited potential for profit. Simply put, any cost that does not help you produce is a cost you cannot accept.
 
So when Obamacare passed, many of us knew exactly what would happen. The mandate on employers to provide health insurance for anyone who worked more than 30 hours a week amounted to a new cost that those operating on tight margins simply could not absorb and remain profitable.
 
That left small businesses with a few options. One was to limit employees to fewer than 30 hours a week, which many did. Another was to severely curtail hiring, or to freeze it altogether. And as we now see, 41 percent of small businesses have taken the latter approach.
 
To understand why, recognize that the cost of employing a person is already much greater than just the wage or salary they are paid. You also have to figure in the cost of employment taxes and various other related costs. Depending on the nature of your business or where you are located, the employee may also need a uniform, parking, an office, a computer, professional membership fees . . . employees are expensive.
 
Many companies see health insurance as a good investment in high-quality employees, and in many cases it is. But that’s not true in every situation, and it’s for the employer to decide. Most of the time, they do not choose to pay for health insurance for part-time employees because the contributions made by these employees do not justify the added cost.
 
So when Obamacare passed, mandating this benefit for all employees working 30 hours or more, it took away from employers the right to determine how, and how much, to invest in people in exchange for the productivity the employers would receive in return.
 
The attitude of Obamacare supporters is, “Businesses have the money!” But it’s not necessarily true at all that businesses have the money. In addition to tight margins, many have cash flow issues, and adding to the cost of employing each person can cause situations in which a company misses payroll or has to access lines of credit or even high-interest, short-term financing to cover it.
 
The obvious answer for the typical small business is: Don’t hire. That’s the only way you can control your costs in an environment where government dictates to you what the cost of an employee must be.
 
I do not think most Democrats understand anything about business finance. Their so-called “knowledge” comes from listening to union bosses who rail against “greedy corporations” who are sitting on massive piles of cash “on Wall Street” and shafting their workers. None of this has much to do with the real world, but that’s what Democrats think and that’s why we have the laws we have.
 
I suspect they still don’t understand how much they are contributing to persistent high unemployment, which is why they need to be replaced, and then Obamacare needs to be repealed.
 
Following the conclusion of his presidential campaign, Herman Cain established The Cain Solutions Revolution, an organization whose mission is to educate the public and advocate for the policy solutions that drove his campaign for the presidency. Read more reports from Herman Cain — Click Here Now.
 
 
 

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