Deseret Industries is cutting the number of hours its workers can work because of Obamacare. You can read about it here.
The bottom line is that Obamacare requires companies that employ more than 50 people to provide health care to workers who are employed more than 30 hours a week.
So, instead of providing health care to its workers, DI is cutting the number of hours worked.
This step is completely appropriate and in line with how many companies will deal with Obamacare. Some companies with 60 workers are firing 11 so they can get under the Obamacare mandate, and others are cutting back on the number of full-time workers.
This is exactly what some of us predicted would happen under Obamacare, the single worst piece of legislation passed by Congress in many decades.
Of course the liberal lurkers are mentally decrying the greed of employers, why don’t they care about the workers, etc, etc. Only one problem: DI is a non-profit with the mandate of employing as many people as possible. Nobody at DI is getting rich. DI is taking this step to continue to provide entry-level training and employment to the maximum number of people.
And many of the same principles that apply to DI also apply to for-profit businesses.
Let’s consider some basic numbers.
Let’s say DI’s budget to spend on workers is $100,000 per year.
A person working 40 hours a week making $7.25/hour costs $15k per year.
There are administrative costs, so the number of people employed by DI would be six.
Now, let’s say that DI as an employer must now provide health insurance to its employees. Health insurance generally will cost about $5000 per year per employee, sometimes a lot more, sometimes a little less. Let’s say $5k to be conservative. So, if we add this cost, it is very easy to see that DI can no longer afford to hire six people. With health care costs added in, DI can only hire five people, and even that is stretching it. $15k per year times five equals $75k. Plus $25k in health care costs equals exactly $100k, and this does not take into account any administrative costs.
Forcing DI to provide health care just cost one person a job.
DI’s purpose is to provide the maximum amount of work experience to low skilled workers (many of them refugees) so it simply does not make sense for DI to provide health insurance.
DI’s only reasonable choice was to cut hours so that a maximum number of people could continue to work there.
So, Obamacare just cost DI’s workers money.
Again, this is not a case of some greedy owner taking all the money for himself. This is simply basic economics at a nonprofit.
But as I wrote here, the exact same principle applies to for-profit companies.
The owner of a McDonald’s faces the exact same dilemma as the managers of DI. He has the same theoretical $100k for salary. If health care is mandatory, he must fire workers. If the minimum wages is increased, he must fire workers.
So, expecting business owners (and nonprofit managers) to either raise salaries or provide health care means that fewer people will be hired, and it also means that sometimes companies will make full-time employees part-time employees so they can get around the onerous rules imposed by government.
A reminder: nobody owes you or anybody else a job. A job involves the voluntary exchange of something valuable (your time and talents) for something else of value (money). $7.25 an hour is not a great wage, but nobody is forcing the people at DI or McDonald’s to take the job. They value the employment they are getting for their own personal reasons.
Government rules, regulations and mandates (such as Obamacare) mean that fewer people are employed. The expansion of government rules such as Obamacare is the primary reason the unemployment rate remains stubbornly high.
So, if you truly want to help the poor, help them get a job by decreasing the numbers of rules and mandates. It is the only logical and charitable thing to do.