By: Bryan Bero
When introduced the Patient Protection and Affordable Care Act (PPACA), or Affordable Care Act (ACA) for short. It was widely believed that the introduction would reduce hiring for small businesses with less than 50 employees, and overall become detrimental to the growth of small businesses. Through my research and experience in this matter, I have been learning new and interesting things about the ACA and its effects on small businesses as well as the staffing industry as a whole.
What I have learned so far is that Obama Care (ACA) is a mixed bag for many different reasons. It was created to support the working class people who are either on or below the poverty line in hopes of providing them with affordable health insurance, regardless of prior illnesses or other negating factors. They did this by subsidizing health insurance costs and ensuring that the majority business owners will contribute to a percentage of the costs. The government is working towards relieving itself of the burden of providing healthcare coverage to individuals who earn less than 28,000 dollars a year. This roughly converts to approximately 14 dollars an hour for a full time employee working a 40 hour a week job. With the federal minimum wage at $7.75 a vast majority of employees qualify for some sort of government assistance, whether it is Medicare or food stamps.
Before ObamaCare there was no way a minimum wage employee could afford the high premiums for healthcare coverage, and provide for the family. Now with the government chipping in, and employers chipping in, the average American worker can afford relatively the same health care coverage.
However, the mandates and restrictions that are imposed on the businesses will also have negative effects on the company’s ability to create new jobs and hire new employees. The profits that have been earned and ear-marked for growth will now have to be re-directed to cover the additional healthcare costs of the current employees. Industries with lower profit margins may be put out of business or have to drastically reduce costs, and reduce those costs any way possible. In order to maintain there current profit margin, the business these companies will either have to raise prices of their goods or services, lower the number of employees or reduce hours substantially.
At Certa Staff we have already seen this take affect with a couple of our clients. One client, who has extremely low margins, was forced to cut their entire 3rd shift, laying off 25 full time employees. This was done to lower their overall full time employee headcount to fewer than 50, so they wouldn’t be fined by the ACA. They moved some of our 3rd shift employees to other shifts in order to increase production levels on those shifts, but the rest was let go. By providing contract-to-hire employees to our client they were able to maintain, their profit margins, while complying with the A.C.A. As 2017 rolls around and the ACA becomes fully implemented and the laws start to become understood more clearly, I believe small businesses will start to outsource its employees at a much higher rate than ever before. The Staffing industry is indeed on the radar for future growth.