ObamaCare Delay Is Too Little, Too Late

Investor's Business Daily

For many workers, the one-year delay in ObamaCare's employer mandate was too little, too late.

The delay doesn't offer sufficient reason for CY Farms in upstate New York to reconsider its decision to cut 25 workers from its payroll, managing partner Craig Yunker told IBD.

Those workers were let go when the farm decided that the additional costs of complying with ObamaCare made it hard to justify planting a labor-intensive cabbage crop this year.

"Last February is when we needed to make decisions about buying seed and growing the transplants in a greenhouse," Yunker said.

The slimmed-down farm now falls just below the 50 full-time- equivalent worker threshold that triggers ObamaCare mandates.

The 2010 health law's nondeductible penalties of $2,000 per worker (minus the first 30 workers) could have cut roughly $80,000 from CY Farms' after-tax bottom line.

Like CY Farms, many public and private employers had shifted their hiring policies to limit new liability under ObamaCare by the time the Obama administration moved on July 2 to delay the employer mandate until 2015.

The Compliance CalendarFor most, the reason for acting so early had nothing to do with the planting calendar and everything to do with the compliance calendar. That's because ObamaCare penalties that had been set to take effect in 2014 were supposed to be based on staffing levels in the second half of 2013.

The state of Virginia passed a law in February limiting hourly wage employees, including adjunct professors at state community colleges and universities, to 29 hours per week. At the time, the state said about 7,300 workers faced reduced hours.

A spokesman for Virginia Gov. Bob McDonnell signaled that there's no consideration of a temporary change in the law.

The Virginia Department of Alcoholic Beverage Control, which operates 330 stores, had to cut hours for about 600 workers starting in April. The one-year delay in the employer mandate will be of no help to these workers, the agency confirmed.

Under ObamaCare, large employers are required to offer 95% of full-time workers health coverage, or else face a $2,000 per-worker fine. Yet those who offer coverage that is deemed too pricey or too skimpy would pay a $3,000 annual fine per full-time worker who accesses ObamaCare subsidies.

To minimize ObamaCare costs, many employers have sought to limit the number of staff clocking 30 hours per week, the health law's definition of full-time.

The Buca di Beppo restaurant chain has cut hours of about 400 workers below 30 a week, the founder of parent company Earl Enterprises told the Orlando Sentinel. Though the interview came a week after the mandate delay, Robert Earl gave no hint that he might rethink the move.

Another potential way of limiting liability under ObamaCare is by using more temporary workers. Reuters reported that Wal-Mart (WMT) has done just that, boosting the temp share of its U.S. workforce from 1% or 2% to "fewer than 10%" this year.

Too Hard To Reverse CourseIt's inconceivable that a brief reprieve from ObamaCare's mandate would cause Wal-Mart to reverse course.

For many large employers, shifting the full- and part-time mix of employees is like turning a battleship — especially if the change primarily affects new hires.

Thus it's not surprising that many began the shift long before the mandate delay.

The average workweek for nonsupervisory retail workers, which reached a post-recession peak of 30.8 hours in January 2012, has steadily fallen to 30.1 as of June.

ObamaCare's mandate also has hit public education hard. Squeezed by fiscal constraints, many school boards and community colleges, facing untenable new costs under the health law, have acted to cut worker hours.

Ivy Tech Community College, which has grown increasingly reliant on adjunct faculty at its 23 Indiana campuses, adopted a policy capping adjunct course loads this spring. It's been holding job fairs to recruit new adjuncts.

Communications Director Jeff Fanter said Ivy Tech intends to "to stay with the plan and not bounce back and forth" due to the mandate delay.

Arizona's Maricopa Community Colleges, which plans to cut hours for 700 adjunct faculty and 600 part-time workers, is "not postponing our decision in light of the delay," spokesman Tom Gariepy said.

A couple of school boards that voted to cut some workers' hours said they'll ease up, temporarily.

Vigo County Superintendent Daniel Tanoos told Indiana Public Media, "Right now we're going to go back to treating our employees with dignity, and giving them back the hours that were cut and the money that was taken out of their pockets.

Fort Wayne Community Schools won't reverse its decision to cut the hours of 610 teaching aides and cafeteria workers. That move came amid major budget challenges that would have been exacerbated by the health law, said CFO Kathy Friend.

While some cuts might have been put off without the mandate, she said there was no thought of putting them off due to the delay.

"We already went through the pain," she said.

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