Friday, November 29, 2013

Obamacare and Minimum Wage


Minimum wage workers are often also unskilled workers.  James Sherk and Patrick Tyrrell’s report for the Heritage Foundation shows that under Obamacare, the government has already raised the minimum wage without any advantages for the employees.  By forcing businesses to contend with an unwarranted wage hike, the government has subverted the natural order of free markets causing unnecessary friction.  As well intentioned as Obama may have been, the high regulations under his policy are detrimental to our economy and ultimately hurt the most vulnerable of all Americans.

According to Obamacare, businesses with 50 or more employees must provide workers with health coverage that meet “minimum standards” or pay a $2000 penalty per full time employee.  Sherk and Tyrrell point out that beginning in 2015, full time employees must produce at a minimum of $10.30 per hour otherwise, “employers will lose money….”  If Obama’s proposal to raise the national minimum wage to $10.10 succeeds, the total cost to employers shall become $12.71 per hour to cover full time employees.  That amount includes the unemployment insurance and the employer’s share of payroll taxes that every employer must pay.  Herein is one of the big problems with Obamacare.  If employers are unable to lower the pay below minimum wage and if paying $12.71 per hour to 50 or more full time workers is detrimental to a business, aside from shutting down the business altogether, what else can employers do? 

In many cases, businesses have stopped hiring new workers.  A close look at the steady unemployment rate in the country bears witness to this fact.  Additionally, some businesses have started the process to lay off workers or reduced their hours from full time to part time to avoid the heavy penalty under the law.   

Obama made many claims as he pushed his Affordable Healthcare Act on the American people.  Much of the rhetoric was about how the new healthcare law would help Americans.  Unfortunately, many Americans have lost their health insurance and experienced job loss or the unwanted transition from full time work to part time work under Obamacare.  As we grapple with the reality of this nightmare, the government continues to push Obamacare upon us.  Yet, no proposed “fixes” for a law that has already proven to be broken can answer a few basic questions for Americans.  For instance, how is Obamacare affordable for people who are now without jobs?  How is Obamacare affordable for people who now have to work two or more part time jobs just to make ends meet?  How is Obamacare affordable for millions of people who no longer have health insurance?   In the aftermath of the Obamacare fiasco, the government has no answers for millions of Americans who are now suffering from the results of a well-intentioned idea.  Ironically, the government continues to function and grow even as it destroys the livelihood of precisely those it claims to be helping.

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