Obamacare May Cost Small Business 'Whiners' 65% of Annual Profits

[Alan C.]

Obamacare May Cost Small Business 'Whiners' 65% of Annual Profits

Baked in the Sun does about $8 million in annual revenue, however margins for bakers are tight so their annual profit is only about $200,000. Because the business has over 50 employees, they will be required to offer health insurance to their employees or pay a fine for not doing so.

The owners estimate that the cost of compliance would be $108,000 per year plus $10,000 in overhead to manage the plan. The cost of paying the fine for not offering insurance would be $130,000. So they have a choice between losing 64% or 65% of their annual profits.

The article goes on to note that not all employees will take the insurance being offered. Some will already have it through another individual--a spouse or parent. So the actual cost of offering a plan will likely be less than the potential cost. Of course, no one knows what the plans themselves will cost yet so it's all a guess at this point.

In any case, just a week ago Five Guys burgers announced the cost of Obamacare compliance was going to force them to raise prices. Matt Yglesias, who writes for Slate, was quick to call them "whiners."

Obamacare is going to reduce his profits by about one-eighth and he (and any investors in his business) will eat the loss. With corporate profits as a share of the economy at an all-time high, nobody's going to cry for him either.

In other words, eat the 1/8 loss of profits and shut up about it. But unlike Five Guys, Baked in the Sun facing a loss of up to 2/3 of their annual profits, meaning they will almost certainly be forced to raise prices.

“It’s ironic that our success meant we could grow,” Ms. Shein said, “and now we will be competing against smaller companies, with 50 employees or fewer, who will be able to charge less per item because they don’t have the financial burden of health insurance.” Prices are currently similar among local competitors, Ms. Shein said, and she believes the increase in her prices could affect her sales, possibly significantly.

I pointed out on Twitter that it was weird Yglesias hadn't said anything about Baked in the Sun and his response was that he'd already said all he had to say. The cost of compliance and the potential loss of revenue from smaller competitors--it's all irrelevant. Just stop whining, he explained.

When people complain about increased prices and job losses, I wonder if Matt Yglesias will call them whiners.

[SimonF]

 

When people complain about increased prices and job losses, I wonder if Matt Yglesias will call them whiners.

 

It's a disgusting shaming tactic and minimizing of others interests over ones own. It has the stink of hypocrisy all over it.

[Mister Mister]

so you have government transferring wealth from employers to connected insurance companies who will probably end up denying those employees' claims anyway.  and then people say the rich employers are getting justice and shouldn't complain.  Fascinating

[Merralea]

I think most knew this would be a result, but interesting to see it beginning.

It'd be fun to track the number of companies with exactly 49 employees over time. I worked with a year-old cleaning company over the summer that was small enough that I talked to the owners regularly, and they knew they'd have to either stay under 50 or start hiring under the table to stay in business. 

[Alan C.]

Obamacare Harms Colleges And Their Employees

The University of Virginia is expecting a roughly $7-million bill for Obamacare’s new employer penalties, said Susan Carkeek, the University’s vice president and chief human resources officer. “We’re expecting fairly significant cost implications from the Affordable Care Act that pass on new penalties and charges, fees to employers – probably in the order of $7 million a year,” she explained in an interview.

Community colleges across the country are slashing employee hours to avoid costly Obamacare mandates. For example,”Pennsylvania’s Community College of Allegheny County (CCAC) is slashing the hours of 400 adjunct instructors, support staff, and part-time instructors to dodge paying for Obamacare.” Youngstown State University is also “trimming staff hours to avoid Obamacare’s fiscal burden.”  Other universities are also cutting employee hours, which is “a double whammy” for instructors, who are “facing a legal requirement [under the new law] to get health care and if the college is reducing our hours, we don’t have the money to pay for it,” said an adjunct biology professor.

Other employers are now cutting full-time workers and replacing them with part-time workers (which helps conceal high unemployment) in order to avoid Obamacare mandates that apply to full-time employees, a phenomenon chronicled at the Huffington Post and on Fox News. Obamacare is causing layoffs in the medical device industry, and will wipe out many jobs. It will reduce employment by an additional 800,000 because of work disincentives and bizarre income-cliffs. Earlier, restaurant chain CEO Andrew Puzder explained how the 2010 health care law is preventing jobs from being created in the restaurant industry, and resulting in layoffs in other industries. John Stossel reported on how Obamacare is stopping businesses from hiring.

Obamacare is also resulting in more wasteful medical tests, driving up unnecessary medical billings, and wasting doctors’ time. The Dean of Harvard Medical School, Jeffrey Flier, said that Obamacare will reduce life-saving medical innovation.

Stop whining.