The new 49ers are businesses that will not, cannot, hire that 50th employee because it triggers massive cost increases under Obamacare.
Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more “full-time equivalent workers” to offer health plans to employees who work more than 30 hours a week. (The law says “equivalent” because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don’t offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well.
These employment cliffs are especially perverse economic incentives. Thousands of employers will face a $40,000 penalty if they dare expand and hire a 50th worker. The law is effectively a $2,000 tax on each additional hire after that, so to move to 60 workers costs $60,000.
The 49ers are not to be confused with the 29ers although the 29ers were created by Obama too. These are companies that will never give a part time worker more than 29 hours a week.
The savings from restricting hours worked can be enormous. If a company with 50 employees hires a new worker for $12 an hour for 29 hours a week, there is no health insurance requirement. But suppose that worker moves to 30 hours a week. This triggers the $2,000 federal penalty. So to get 50 more hours of work a year from that employee, the extra cost to the employer rises to about $52 an hour—the $12 salary and the ObamaCare tax of what works out to be $40 an hour.
The Central Planners thought they could override the iron clad laws of economics by demanding a massive transfer of wealth. The reality, however, is that they have made life much, much more difficult for the very people they supposedly wanted to help. It is either profound malfeasance and incompetence or Cloward and Piven genius.
I’d say it is some of both. There were fools in Congress who didn’t see this coming and are now surprised. These people paved the road to this particular hell with good intentions.
The Administration, however, knew what would happen. Their goal from the start was to “fundamentally transform” America and nothing will do that faster than unemployment, poverty and an overburdened and collapsing social welfare system. Only when the masses are destitute with the long awaited social revolution begin.
The 49ers and 29ers are all part of the plan.