The Biggest Economic Story of 2013...
Sorry, but it is not the fiscal cliff. It is the complete shift in the US labor model, at least in the service sector, due to Obamacare.
Here is what I am doing for the rest of the year -- working with every manager in my company so that as of January 1, 2013, none of our employees are working more than 28 hours a week. I think most readers know the reason -- we have got to get our company under 50 full time employees or else I am facing a bill from Obamacare in 2014 that will be several times larger than my annual profit. I love my workers. They make me a success. But most of my competitors are small businesses that are exempt from the Obamacare hammer. To compete, I must make sure my company is exempt as well. This means that our 400+ full time employees will have to be less than 50 in 2013, so that when the Feds look at me at the start of 2014, I am exempt. We will have more employees working fewer hours, with more training costs, but the Obamacare bill looks like about $800,000 a year for us, at least, and I am pretty sure the cost of more training will be less than that.
This will be unpopular but tolerable to most of my employees. The vast majority of them are retired and our company is merely an excuse to stay busy, work outdoors, and get a little extra money.
But this is going to be an ENORMOUS change in the rest of the service sector. I have talked to a lot of owners of restaurants and restaurant chains, and the 40-hour work week is a thing of the past in that business. One of my employees said that in Hawaii, it was all the hotel employees could talk about. Many chains are working on mutli-team systems where two teams of people working part-time replace the former group of full-time employees. 2013 is going to see a lot of people (who are not paid very well to begin with) getting their hours and pay cut by 25%. At the same time that they are required, likely for the first time since many are relatively young, to purchase health insurance.
It will be interesting to see what solutions emerge. My bet is that it will become standard for people in the service sector to work two different jobs for 20-25 hours each with two different companies. This will be a pain for them, but allow them to keep their income up. The hard part may be coordinating shifts between companies. For example, a company that divides their shifts into mon-tue-wed vs. thu-fri-sat cannot share employees with one who divides their shifts between morning and afternoon. If given time, I would guess that just as the mon-fri workweek emerged as a standard, companies may adopt standard ways of dividing up the work weeks for part-timers, making it easier for schedules to mesh.
Since Brian Dunbar was clearly being facetious, I will presume that you are too. Unless your goal really is to drive companies out of business.
Oh. You really do want to destroy businesses.
No, I'm addressing the misuse of temporary labor - by making it too costly to circumvent. By identifying circumvention as non-compliance (such as done with banking laws), it effectively ends the 49-employee,29-hour syndrome.
If one really wishes to use temporary labor, then it should solely consist of people that choose it actively over an equally attractive permanent option - not consisting of people in a European-style labor relations model.
Is there any doubt this system will fail and they will institute National Health Care, Canadian or British style, with disastrous consequences?
It is designed to fail. They will blame the insurance companies instead of 50 years of socialized medicine.
How about Germany, Australia, Singapore?
A potential nationalized health care system with over 300 million participants and a dysfunctional, out of control central government administering it. Perhaps the Soviet Union would have been more apt as a metaphor?
Singapore has a top-down govt health care system with 30% payroll taxes but it covers everyone and costs about 6% of their GDP - 1/3 of ours.
so if Singapore, or Australia, or Germany, Switzerland, Japan can do it and do it well with central govt why do you say it will only end up dysfunctional here?
Would you consider Singapore, Australia, etc "out of control"?
You can still have all of your full time people. All you have to do is make them all outsources. Have them setup LLC's for themselves. The best is a New Mexico LLC, best laws governing them, best protection, privacy, etc. There are service bureau's online for that. There is no law telling anyone how many outsources he can have. You can pay them more as well ... pay them what you pay for benefits and payroll tax. Let them handle their own tax situations with no withholding. The best part for your employees ... by making them outsources, they can give themselves a huge payraise by dropping out of the tax system. How? Participation in Social Security is 100% voluntary according to ssa dot gov, and, it is participation in Social Security that converts mere hire into employment which is a taxable privilege. An LLC is a flow thru entity for tax purposes. If the LLC is held by an unincorporated business trust organization instead of a taxpayer, the liability simply goes away. If an SSN is needed for a bank account for the LLC, it can be conditioned that it is being given for identification purposes only and not as a taxpayer ID number since no taxable activity is being engaged in. Read the Dave Champion book "Income Tax: Shattering the Myths" available via taxrevolt dot us. Also google Robert Arthur Menard and see his videos "Bursting Bubbles of Government Deception" and "The Magnificent Deception". Both can be seen free on the web. In the second one, he explains how an SSN used for "employment" incurs tax liability. He is up in Canada but the system is pretty much the same, up there it is called the SIN or Social Insurance Number.
Hope that helps.
Pete
I would suggest that with their debt levels Japan will go the way of Greece.
Greek health system crumbles under weight of crisis
http://www.reuters.com/article/2012/06/14/us-greece-health-idUSBRE85D1IO20120614
I would consider Singapore 60 times smaller than the US. I would consider Australia on the Argentina, Japan, Greece track.
Default or hyperinflation - here we come!
When people start complaining about fewer hours, Obama is going to start ginning up hatred for big and small business alike. His only solution will be to present Single Payer. It should be a wake up call to Americans to demand the complete overthrow of Obamacare and the nutty barriers that healthcare companies encounter due to government interference in the market.
Fortunately young men of European descent are beginning -- in the most progressive universities -- to sign pledges denouncing such odious qualities as heterosexuality and "whiteness." This will help them from exercising "male privilege" and "white privilege" by employing oppressive behaviors such as reasoning, thinking innovatively and working hard. The path to equality is the enforced reduction to the lowest denominator. Social justice will prevail.
Except for those of us in the business, no one, and I mean no one understands how much this is going to cost us all. If you pay premiums now, double them and you will know what your cost will be in 2015. However, I can give you a glimmer of hope. The law has a financing circuit breaker. Once the total cost of the program reaches .504% of GDP, the Feds are relieved from the responsibility of funding premium subsidies. So if your State adopts an Exchange, the State will be responsible for funding the premium subsidies. Once this occurs, you can bet the States will run out of money..fast.
Because insurance carriers are going to make as much money as they can before the new laws take effect. After that, they need to prove Medical Loss Ratio.
Wrong answer.
Companies respond to incentives, like employee costs increasing.
When that happens, companies a) pass that cost along to employees and/or consumers, or 2) lay people off.
Gee, why do you think this recovery has sucked ass more than any post WWII recovery so far (possibly ever)? Think it may have something to do with Obamascare?