A recent article by the Wall Street Journal, ObamaCare and the ’29ers’, explains how new mandates and regulations are beginning to reduce full-time employment and reshape hiring practices. As I read the WSJ piece I could not help but wonder if employers have thought about the millions of seniors shoved out of the workplace throughout this recession.
Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more “full-time equivalent workers” to offer health plans to employees who work more than 30 hours a week. (The law says “equivalent” because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don’t offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well.
At age 65, seniors qualify for Medicare benefits. As a small business employee, the senior then becomes an immediate cost advantage over a younger person, because their health insurance requirements are already met.
Although the federal mandate for employers to offer health insurance to full-time employees doesn’t take effect until 2014, the measurement period used by the feds to identify a company’s full-time employee base started last month. The employment cutbacks are now underway.
If you’re a senior with Medicare and you’re trying to find employment, update your resume. Highlight that you offer an employment savings compared to younger workers. As a Medicare beneficiary, seniors can work full-time or part-time without an impact to a franchise owner. This is a big deal to the franchise industry. Here’s why:
A 2011 Hudson Institute study estimates that the ACA insurance mandate will cost the franchise industry $6.4 billion and put 3.2 million jobs “at risk.” The insurance mandate is so onerous for small firms that Stephen Caldeira, president of the International Franchise Association, predicts that “Many stores will have to cut worker hours out of necessity. It could be the difference between staying in business or going out of business.” The franchise association says the average fast-food restaurant has profits of only about $50,000 to $100,000 and a margin of about 3.5%.
Employment cuts won’t be limited to franchisees or restaurants. A 2012 survey of employers by the Mercer consulting firm found that 67% of retail and wholesale firms that don’t offer insurance coverage today “are more inclined to change their workforce strategy so that fewer employees meet that [30 hour a week] threshold.” Although hiring more seniors will not change the trend towards reducing employee hours to meet the 30 hour per week “part time employee” threshold, it eliminates the $2,000 annual penalty on the senior citizen worker.