NEW YORK — Will Obamacare choke off hiring in the fragile U.S. job market?
Critics claims the Affordable Care Act — a.k.a. Obamacare — will cost the economy jobs. But economists’ views are mixed on the issue.
Nine out of 14 economists polled by CNNMoney said businesses are putting off hiring in light of health care reform, which stipulates that employers with 50 or more workers provide affordable health insurance starting in 2015.
We’ve heard anecdotal stories from small businesses owners that healthcare reform is causing them to give employees fewer hours.
But there is also reason to believe the job killing criticism could be overblown.
As of 2010, 97% of small businesses had fewer than 50 employees, according to the U.S. Census. That means Obamacare’s employer mandate applies only to 3% of America’s small businesses. Of companies with more than 50 workers, 96% already offer health plans, government data shows.
The ADP jobs survey — one of the largest surveys of private employers — shows that small businesses are still hiring strong.
“There is little evidence that fiscal austerity and Health Care Reform have had a significant impact on the job market,” said Mark Zandi, chief economist of Moody’s Analytics and a collaborator on the ADP report, in a press release with the August survey.
The case for hurting job growth: Uncertainty was the big reason economists gave for why employers might not be hiring — uncertainty over how much it’s going to cost to insure additional workers, and how much health care premiums for existing employees might go up.
“The ambiguity over the law’s actual impact on health care premiums imparts uncertainty over where true labor costs will be going,” said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida. “It is understandable that businesses would choose to delay any hiring that is not absolutely essential rather than running into that fog.”
A few of the economists predicted the legislation would cost the economy around 10,000 jobs per month.
Several also mentioned that Obamacare is one of many policy uncertainties out of Washington that’s acting to suppress job growth — the others primarily relating to the seemingly endless talk of a government shutdown.
Other economists said businesses are bound to hire less because the cost of each employee will likely go up.
“Any time you attach an extra cost to labor you will cause it to be less fully utilized,” said Robert Brusca, chief economist at Fact and Opinion Economics, a Manhattan consultancy.
The case against: Economists saying Obamacare is not having a meaningful impact on jobs tend to argue that hiring is not driven by labor costs, but rather demand for goods.
“Work still needs to be done,” said David Wyss, a fellow at Brown University. “But it may be biasing toward more part-timers.”
Others noted that most people already have work-provided health insurance, and many small companies are exempt from the law because they employ fewer that 50 people.
“Not enough companies are negatively impacted, and those that are are adjusting in other ways,” said Zandi.
One economist speculated that the health care law will boost jobs, as all those exchanges will need people to run them.