Under ObamaCare, the 30-hour workweek may take a cue from the clumsy Dodo bird and disappear — due to clumsy regulation.
If that sounds extreme, just consider: For a worker making $16 an hour for 29 hours per week, the 30th hour of work each week could cost an employer $112.15.
In other words, ObamaCare could cost an employer as much as $96.15 extra an hour — or six times the going hourly wage in this example.
Here’s how: Employers who offer health coverage that is deemed either too pricey or too skimpy will owe $3,000 for each full-time, 30-hour-per-week, worker who taps ObamaCare subsidies.
Because the $3,000 fine is nondeductible, it’s equal to $5,000 in deductible wages for a profit-making firm facing a 40% combined federal and state tax rate.
Simply dividing that $5,000 by 52 weeks yields an ObamaCare cost of $96.15 per hour.
The 31-hour, 32-hour, 33-hour and 34-hour workweeks also may become relatively rare.
For example, ObamaCare could tack on as much as $48 per hour for a worker clocking 31 hours, or two hours beyond ObamaCare’s care-free threshold of 29 hours per week.
Yet, even for those clocking 40 hours, the incremental cost of ObamaCare of $8.74 per hour beyond the 29th hour of work could effectively add 55% to a $16/hour wage.
When it comes to modest-skilled, modest-wage workers in highly competitive industries with low profit margins, employers will be hard-pressed to ignore such cost increases.
Not surprisingly, there’s evidence that employers are already taking steps to dodge ObamaCare’s penalties. Retailers have been cutting hours for nonsupervisory workers at the sharpest rate in more than three decades, Labor Department data show.
Still, there is much uncertainty about just how dramatic the shift to sub-30 hours per week will be. Employers will likely perceive a cost to worker productivity and satisfaction if they depend too heavily on part-timers. However, the pressure to keep prices low or risk losing business may limit flexibility.
A big unknown is the extent to which workers who are eligible for ObamaCare subsidies will opt to sign up. Doing so will require those earning 200% to 300% of the poverty level to fork over 4% to 7% of income for a bronze plan.
Some employers are betting young, low-income workers won’t. As an enticement to keep ObamaCare participation low, some firms are preparing to offer their workers “skinny” coverage for basic expenses like doctors visits and generic drugs as an alternative to paying a tax penalty.
Read More At Investor’s Business Daily: http://news.investors.com/politics-andrew-malcolm/060313-658533-obamacare-cost-of-96-an-hour-may-end-30-hour-workweek.htm#ixzz2VGXEUGmp