Give employers an incentive to cut workers’ hours to fewer than 30 per week, and — shocking as it might sound — workers will see their hours cut to fewer than 30 per week. The latest Bloomberg Businessweek documents efforts to fight this unintended consequence of Obamacare.
The sticking point for many is the legal definition of a full-time worker as anyone averaging at least 30 hours a week on the job. By 2015, any company with more than 50 such employees (including “full-time equivalent employees,” according to the law) will have to offer health benefits. Restaurant execs have been meeting with Congress in a lobbying effort to nix the 30-hour rule.
Restaurant owners face two choices: If their businesses are profitable, they could dig into margins to cover the cost of insuring additional workers, thus curbing growth; or the owners could simply cut workers’ hours to stay away from the 30-hour threshold as much as possible. Some 16 percent of restaurant workers are at risk of reduced hours, according to estimates from the University of California at Berkeley’s Center for Labor Research and Education.
Firehouse Subs, the fastest-growing restaurant chain in the U.S. with more than 660 company-owned and franchised eateries, doesn’t plan to cut workers’ hours. But Chief Executive Officer Don Fox is sure that pressure from Obamacare-related costs will slow the rapid expansion of new sandwich shops. “It is not a matter of if it will slow them down,” he says of the health-care law. “It is simply a matter of degree.” Dollars spent on health benefits, Fox adds, are dollars that could have gone toward a new location.
This situation offers another good Obamacare-related example of the law of unintended consequences.