Despite repeated warnings that fear of the Affordable Care Act would smother hiring, a new survey conducted by Roanoke, Virginia-based CBIZ Payroll Services indicates that among smaller firms the worst has not come to pass. In the nationwide survey of 3,500 businesses with 300 or fewer employees, 26 percent said they were adding to their payrolls in March, while 20 percent were cutting, and about half were holding steady. Overall, hiring in this group was up about 1 percent over the previous month--the first hiring increase of 2014. (The Labor Department also reported a broad uptick in hiring: the U.S. economy added 192,000 jobs in March.)
In the four years that CBIZ has been tracking small-business employment numbers, March has always been an up month, says Philip Noftsinger, a business unit president at the company. "If we weren't seeing a good positive number, we would be concerned." Noftsinger reads the fairly typical increase last month as a sign that anxiety about Obamacare is dissipating--at least for now.
"Part of the reason that the Affordable Care Act has had little impact in the short-run is because there's been very little implementation," Noftsinger says. "They keep pushing it off. Businesses that resisted hiring during late 2013 because of pending implementation, now see so much delay, and can't wait any longer to respond to increasing demand." Thanks to delays, businesses with more than 100 full-time employees now have until January 2015 to start offering health coverage; companies with 50 to 99 workers have until January 2016.
For smaller companies with fewer than 50 employees, Noftsinger predicts that the impact of Obamacare could be mostly positive. By giving workers an "allowance" to buy health insurance through the individual exchanges, small businesses can hold their health-care costs steady. And because people earning up to 400 percent of the federal poverty level qualify for subsidies, employees may find this a better deal than their old employer-sponsored health plans.
Where it will get hairy is for companies with 49 to about 75 employees, Noftsinger says. "That's kind of a dead zone," he says. "There will be a lot of problems, because the increase needed to overcome the cost differential when you go from 49 to 50 is going to create a stall." How businesses respond will largely be a function of what competitors do, says Noftsinger. As the new deadlines approach, "they're all going to be looking at each other." Until then, it looks like businesses with less than 100 employees will continue taking their hiring cues from the broader economy, rather than anticipated health-care costs.