Small business owners freeze hiring, cut employee numbers because of Obamacare

Barack Obama giving a statement on the Affordable Care Act at the Fairmont Hotel on June 7 in San Jose, Calif.

A new poll of small business owners shows the negative effects of the implementation of the Affordable Care Act (Obamacare) on the economy, with nearly half saying that they aren’t hiring due to the costs associated with the law, CNBC reported on Wednesday.

The poll, conducted by Gallup, questioned 603 owners of businesses with less than $20 million in annual sales. Forty-one percent of them said they have stopped hiring because of the law, and “almost one-fifth—19 percent— answered ‘yes’ when asked if they had ‘reduced the number of employees you have in your business as a specific result of the Affordable Care Act.’”

Another 38 percent said that they are no longer planning to grow their businesses because of the law. Only 9 percent said it will be good for business.

“We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn’t realize the extent they were concerned, or that the businesses were being proactive to make sure the effects of the ACA actually were minimized,” attorney Steven Friedman, who works for Littler Mendelson, an employment law firm that commissioned the poll, told CNBC.

“If the small businesses’ fears are reasonable,” Friedman continued, “then it could mean that the small business sector grows slower than what economic conditions otherwise would indicate. And small businesses have been a growth engine in the economy.

“To think that [nearly] 20 percent of small businesses have already reduced the numbers they have in their business because they’re concerned about the medical coverage is significant, and a bit troubling,” he said.

Under Obamacare, starting in January 2014, employers with more than 50 full-time employees must provide them with health insurance or pay a $2,000 fine per full-time employee who works at least 30 hours a week. This has many of the small business owners concerned that they may not be able to pay the policies or the fine. As a result, many employers across the country have begun cutting workers’ hours.

A study by UC Berkeley earlier this year found that up to 2.3 million workers will have their hours cut.

“That group represents roughly 1.8 percent of the workforce and consists of people who do not have insurance through their employer, work between 30 and 36 hours per week and earn incomes 400 percent below the federal poverty line for firms with 100 or more employees,” writes Caroline Fairchild.

Other concerns have been brought up about the law, including the possibility of canceled personal health insurance plans, which would seem to contradict Pres. Obama’s promise that “If you like your health care plan, you’ll be able to keep your health care plan.”

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