The Affordable Care Act is amplifying the difference between socio-economic classes because the ACA encourages employers to cut employee hours. The mainstream of college students hold jobs while studying so that they can pay rent and phone bills, and occasionally go to the movies or out to dinner. We get the money for these bills and happenings through bi-weekly paychecks. We work hard, usually for forty to fifty hours a week, and are compensated near minimum wage. Although miniscule, it is still enough to cover the daily expenses in our lives and to have a bit left over for extraneous items, however if hours are lost then this will not be the case for us students. Big businesses for example, are often the ones who disburse paychecks to people attending college. They offer entry-level jobs that are easy to come by, are constantly expanding, and have a high turnover rate. Large corporations, such as Regal Entertainment Group, Five Guys Burgers, and Petco, are cutting employee’s hours down to less than thirty a week. The Affordable Care Act (ACA) supports employers to provide health insurance to employees working full-time (thirty-plus hours weekly).
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By cutting the hours, people are no longer are entitled to health insurance provided by the employer. The lower class of the U.S. economy consists of a demographic of people whose hours are being cut. A continuing decline of hours will only result in more financial burdens on the employees. Losing eleven hours could mean an individual who manages paying for groceries as well as car insurance with the same paycheck may have to start choosing between the two when receiving future checks. In addition to cutting hours, many employers are limiting hiring to avoid spending more money on health coverage. Robert Samuelson supports the idea that the ACA’s costs and complexities are going to deter some companies from hiring, and that it would be divisive to the socio-economic classes. In “Both Sides May Lose the battle over Obamacare” from October 25’s Register-Guard, Samuelson states that as a result of employers not being able to afford health care for all employees, hours must be cut. A business only has reduce hours to under thirty a week in order to avoid paying health care. Once this cut is made, a previously full-time employee is taking home 100-200 dollars less each paycheck. This unfortunate trend will continue and even increase: 15% of larger employers and 20% of small businesses plan to reduce employees’ hours or benefits according to a recent survey by the International Foundation of Employee Benefit Plans.
Small businesses play an important role in the U.S. economy and are a strong driver of job growth and innovation. But small business are severely disadvantaged by the current U.S. health care system relative their larger counterparts. A new report by the Council of Economic Advisors (CEA) examines the challenges faced by smaller firms under the current health care system, and the likely impacts of health care reform on small business and the workers they employ. This implicit tax disadvantages small firms in both the market for the best workers and the market for their products. For example, both Trader Joe’s and Home Depot have stopped providing health care to part-time employees, and Forever 21 plans to cut hours and reclassify some employees as part-time. In fact, businesses all over the country, compelled by the financial strain introduced by the ACA, are making similar decisions. Once the ACA goes into effect, even more businesses will be forced by the financial reality of the Act to reduce employee hours. As the wage earning potential of part-time employees falls, we can expect more extreme changes to the economy.
Among these changes, businesses are now expecting employees to find and fund their own health care. This is nearly impossible when many workers are already living below the poverty line. Irrespective of how small the premiums will be, it will still over-burden many employees. There will be times ahead when many Americans are going to have to choose between paying for their health insurance and paying a monthly bill; disturbing when you consider the children and people with disabilities. Even after these employment cuts, the White House claims that the number of part-time employees that are looking for full-time work remained the same during the month of September at 7.9 million employees. Jason Furman, chairman of the White House Council of Economic Advises said, “We are not seeing any effect in the data.” With this data being manipulated, it would appear that all of the employees that have been reassigned as part-time workers are okay with it. This is not the case; businesses have until 2015 to cut hours and avoid paying for employee healthcare. The number of part-time workers looking for full-time work will steadily increase over the next twenty-four months; the statistics need to be revisited when people are more aware of cuts that businesses are enforcing.
People who fall below the poverty line will pay less for health care compared to those who are in the middle class. Based on individual/family income, people may be eligible for tax credit subsidies through state-ran exchanges. Based on household income, people are placed in different subsidy brackets. Even with the tax credits, people have no choice but to take home less money and to pay out of pocket for health insurance that they previously did not want. Many businesses have claimed they are not cutting hours, but instead are holding off on hiring because of costs caused by the ACA mandates. Employers who postpone hiring are still damaging to the economy. In fact, postponing hiring can do just as much damage, if not more to the economy than cutting hours. People would much rather have fewer hours at a job, than no job at all. In turn, this also increases the unemployment rate, thus driving the wedge between social classes even deeper. Any employer that cuts hours to avoid paying health insurance will create a bigger difference between the socio-economic classes. By taking away hours that an employee is able to work at a business, the employee has no choice but to take home less money in their paychecks.
Earning less money reflects directly on their socio-economic class, setting them farther apart from the wealthier individuals on the scale. Without resolution, cuts in full-time employment will increase the gap between socio-economic classes. It is making the poor even poorer, and separating the less wealthy from the rich even more then they already are. The economy is going to fall into a slump, people will not be able to pay car payments, nor provide adequate food for their families. What is going to happen to our country, the country that is based on the forty-hour workweek, if corporate business does not cease their greedy actions? Our only option is to wait and see what happens.
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