Jim and I discussed this on the show this morning and we thought you might like to read the full article. A recent study by James Sherk of the Herritage Foundation has disclosed that Obamacare will cause unemployment and underemployment of low wage, low skill workers to rise.
We start with this:
The CBO has estimated that the minimum national premium for single coverage will be $5,000 and $12,500 for family coverage. Furthermore, to avoid being fined the employer must not only offer coverage, but also restricts the share of premiums that employees contribute to 9.5 percent of their family income.
The net effect of the CBO’s estimate is that, once Obamacare takes effect, it will cost an employer $27,500 per year to hire a minimum wage employee. That figure includes not only the employee’s salary, but also employment taxes, unemployment insurance, and, more to the point, the cost of providing Obamacare coverage to the employee.
Here is the problem, though. Unless that employee can produce at least $27,500 worth of goods or services to the employer, the employer will actually lose money by hiring that employee. And, there are very few low skill employees who can generate that much revenue for the employer. Given this, one, or all three of the following things will happen.
First, employers will cancel their group insurance and dump their employees into the newly formed insurance exchanges. This will drive up the overall cost of Obamacare dramatically as the lower income families need a higher federal subsidy to pay for the insurance the government mandates that they have.
Second, employers will higher fewer low skill employees. These are the “starter” jobs that the young typically use to learn a trade and climb up the ladder to prosperity. Without these job openings, unemployment will continue to grow.
And third, employers will only hire the low skill employees for part time jobs as an employer is not required to provide insurance to part time employees. This option is limited though as Obamacare treats anyone working more than 30 hours a week as full time, and, “aggregates” hours worked so that 2 part time employees working 20 hours a week each, will count as 1 “full time” employee for the purpose of the penalty the employer must pay for not providing insurance.
Far from creating the 400,000 jobs then Speaker Nancy Pelosi (D. Ca.) proclaimed when Obamacare passed, the bill will actually result in fewer jobs. And, the worst part is that the loss of jobs will more severely impact the young, unskilled American than the rest of the workforce, making those people more and more dependent upon government for their very existence.