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The Spectacle Blog

CBO Says Employer Mandate Would Cause Job Loss Among Low-Wage Workers

By Philip Klein on 7.14.09 @ 8:34AM

The Congressional Budget Office has determined that a mandate requiring employers to provide health insurance or pay a tax would lead to job losses, and that lower-wage workers would be the hardest hit.

"Requiring employers to offer health insurance—or pay a fee if they do not—is likely to reduce employment, although the effect would probably be small," the CBO wrote. "Those who would most likely be affected are currently paid close to or at the minimum wage. They would be more vulnerable to job loss because their wages could not be lowered sufficiently to absorb the cost of health insurance (if their firm decides to offer) or the fee (if their firm does not) without bumping into the minimum wage."

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TennesseeVolunteer| 7.14.09 @ 8:45AM

A good friend of mine is the CFO for a regional fast food franchisee which owns 120 well known fast food restaurants. He told me that the outcome of the last minimum wage increase was they did not increase their overall wages but had less employee hours. He said that their profits are so razor thin, it was the only way to maintain store profitability. On the next minimum wage increase, he is not sure they can do it again but that their profit picture is even worse now than it was during the last one.
When asked about employee mandated health care, he just laughed. he said only 35 stores out of 120 have the profitability to afford the health care. If the health care mandate is carried out, one option for them would be to slowly sell non profitable stores because they own the real estate and keep only the profitable ones. In his industry, a lot of the franchisees are in smaller towns offering entry level jobs to people who have few job choices. More unintended consequences from O'bumbler!

Pete| 7.14.09 @ 9:22AM

Not even sure they are "unintended." Remember, the more goverment dependents there are, the more votes he and his criminal buddies will get.

Bill| 7.14.09 @ 11:19AM

The bottom line is it will take years to cover the 94-96% of Americans that this plan invisions.

The pay or penalize plan the administration is working out, will be a failure. Most companies will bite the bullet pay the penalty and cancel the coverage anyway! They will svae money in the long run!
The debt that states will incur by this plan will bankrupt states who are tettering on the financial brink, the federal government will only cover 57% of the cost of the addition 15-20 million people addd to the MediCare rolls!
Obama and the Democrats are trying to overload the sysytem until it finally collapses. Then the REAL socialist agenda will begin!