The Freedom To Hire

O OUTRO LADO DO MEDO Ã? A LIBERDADE (The Other Side of the Fear is the Freedom)
Creative Commons License photo credit: jonycunha

I‘ve been listening carefully over the last month as a number of people offered their analysis of the jobs problem in today’s economy.

One thread of discussion from a sizable number of folks really stuck out.

“It’s health care reform. No one is going to hire anyone until that’s resolved.”

Generally speaking, I understand the fear, but I think it’s uncalled for in the U.S.

Over There

In some countries, you can be stuck with a new hire “for life”.

Such policies were designed to grow employment and increase consumer spending, but like many things viewed from only one angle – they’ve also had (and continue to have) a slight to significant dampening effect on hiring.

Think about it – if you knew that the next employee you hired was yours “for life” (or say, 10-20 years), you might choose to either contract out that work – or just avoid the work altogether if you can.

Avoiding profit-generating work doesn’t exactly sound like a way to grow your business.

Not in the U.S.

That isn’t what we’re facing here in the U.S.

While you could argue about the pluses and minuses of the Affordable Care Act (ACA / HCR ) forever, what I’m hearing is a genuine HCR-driven fear of hiring.

The primary reasons stated revolve around employers concerned with ever-increasing health care benefit costs. Thing is, these costs have been rising at about 10% per year since at least 2004 in both good and bad economies without ACA / HCR.

Or they hear about the penalties for not having health insurance, which are $2000 per full-time employee per year. While that is LESS than the annual cost of providing a qualifying health insurance plan for employees, even that is misleading because the penalty doesn’t apply to everyone. Back to that in a minute.

Until you know the details, it’s EASY to see how it might make someone think twice about hiring an $8-12 an hour part-time clerical employee. Adding that $2000 cost to their $8 an hour salary effectively adds another $38 a week to their full-time pay, moving them to about $8.97 an hour.

Normally, I’d suggest that you shouldn’t have an employee who isn’t generating at least three times their wages in revenue, but in lean times, I suspect most employers have figured that out.

Still, that $2000 still sticks out.

Did I mention that many of you won’t have to pay it?

The Smallest

In addition to being exempt from penalties, the smallest businesses (with less than 30 full-time workers) get a tax credit for the coverage they provide.

According to IRS form 8941, the Small Business Health Care Tax Credit for Small Employers:

“an employer or tax-exempt organization must have fewer than 25 full-time equivalent employees (“FTEs”) for the tax year, and pay less than $50,000 in average annual wages per FTE. As explained in an IRS press release, the maximum credit available under this program for tax years 2010 to 2013 is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum tax credit will increase starting in 2014 to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible, tax-exempt organizations for two years.”

Escaped Goats

Larger employers worry about the penalties for not providing a plan – but those don’t apply until you have at least 50 full-time employees (or the equivalent) excluding seasonal workers who work fewer than 120 days. For some employers, it will be cheaper to cancel your business insurance and pay the penalty than to offer an employee health insurance plan. Go figure.

Will this change? Like everything in business, probably.

While you take the wait and see approach, your competition is strategically growing their business.

Be Unpredictable

I’ll make it easy for you.

For the sake of argument, let’s assume that you don’t believe a word of this and that you think the ACA / HCR bill is going to get a lot tougher for employers.

Still, you’ve got that pesky mortgage.

Sell the work. Contract out what you have to. Bullish? Go crazy and hire someone whose work might transform your business.

The political stuff will be unpredictable no matter what you do. May as well go kick some butt.