Obamacare Having Little Impact on Small Business Hiring
BY Adam Bluestein
A new study finds that the healthcare law is not affecting payrolls
One of the major concerns surrounding Obamacare is that businesses will either shed workers or refuse to hire in order to avoid the law’s penalties and regulations.
A new study has found that such fears may be greatly exaggerated.
That’s the conclusion of a new survey of small and midsized businesses, by Sage North America, a provider of business-management software. The report shows that a far great number of small and medium-sized businesses plan to hire or keep headcount stable than make cuts.
Among companies employing 20 to 99 workers, 34 percent say they already have or will add people this year; another 34 percent of those companies will stay at current levels. Among companies with fewer than 20 employees, 18 percent are adding employees, and 55 percent staying the same size. Only 9 percent of the larger companies, and 7 percent of the smaller ones, said they were cutting workers. (About 20 percent in each group were undecided.)
What’s more, small employers aren’t replacing full-time workers with part-timers-;another fear surrounding the Affordable Care Act. The survey found that among businesses that have hired or are planning to hire this year, 82 percent are adding full-time employees.
Rather than basing hiring decisions on healthcare costs, 80 percent of survey respondents said their key concern was sufficient demand for their products and services. Those who are not hiring cited uncertainty about the broader economy, lack of demand, and non-healthcare-related costs.
Strikingly, only 11 percent of the businesses with 20 or more employees said that the Affordable Care Act was a reason they were not hiring, compared with 17 percent of the companies with fewer than 20 employees.
That’s somewhat unexpected, given that those smaller businesses have a long way to go to hit the 50-fulltime-employee threshold at which the ACA’s employer mandate kicks in. What gives? Confusion about the law, says Joe Langer, executive vice president for mid-market solutions at Sage North America. “More education on the ACA and its impact is needed,” he says.
The new survey results deserve comparison with similar surveys that have yielded different results, such as one released in April by the U.S. Chamber of Commerce, which sampled 1,332 executives at companies with fewer than 500 employees. In that survey, 32 percent of respondents said that changes in health-care law would cause them to reduce hiring, and 31 percent said it would make them cut employee hours.
It is, however, worth noting the political bias of those surveyed by the Chamber: 49 percent respondents said they approve of the job that House Republicans are doing, versus 15 percent who approve of the President’s job performance. (Recent national polls put Obama’s approval rating at 53 percent.) Sage’s survey did not ask about respondents’ politics.