Businesses claim Obamacare has forced them to cut employee hours

Luke Perfect, who works at a Subway franchise in Kennebunk, Maine, expects to have his hours cut because his employer says offering him health insurance under Obamacare's employer mandate is too expensive.
NBC News
Luke Perfect, who works at a Subway franchise in Kennebunk, Maine, expects to have his hours cut because his employer says offering him health insurance under Obamacare's employer mandate is too expensive.

Employers around the country, from fast-food franchises to colleges, have told NBC News that they will be cutting workers' hours below 30 a week because they can't afford to offer the health insurance mandated by the Affordable Care Act, also known as Obamacare.

"To tell somebody that you've got to decrease their hours because of a law passed in Washington is very frustrating to me," said Loren Goodridge, who owns 21 Subway franchises, including a restaurant in Kennebunk. "I know the impact I'm having on some of my employees."

Goodridge said he's cutting the hours of 50 workers to no more than 29 a week so he won't trigger the provision in the new health care law that requires employers to offer coverage to employees who work 30 hours or more per week. The provision takes effect in 16 months.

Luke Perfect, who has worked at Goodridge's Kennebunk Subway for more than a decade, said it was "horrible" to learn he was among the employees whose hours would be limited, and that it would be a financial hardship. "I'm barely scraping by with overtime," he said.

The White House dismisses such examples as "anecdotal." Jason Furman, chairman of the president's Council of Economic Advisors, said, "We are seeing no systematic evidence that the Affordable Care Act is having an adverse impact on job growth or the number of hours employees are working. … [S]ince the ACA became law, nearly 90 percent of the gain in employment has been in full-time positions."

But the president of an influential union that supports Obamacare said the White House is wrong.

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"It IS happening," insisted Joseph Hansen, president of the United Food and Commercial Workers union, which has 1.2 million members. "Wait a year. You'll see tremendous impact as workers have their hours reduced and their incomes reduced. The facts are already starting to show up. Their statistics, I think, are a little behind the time."

In a letter to Democratic leaders on Capitol Hill, Hansen joined other labor chieftains in warning that the ACA as presently written could "destroy the foundation of the 40-hour work week that is the backbone of the middle class."

NBC News spoke with almost 20 small businesses and other entities from Maine to California, and almost all said that because of the new law they'd be cutting back hours for some employees–an unintended consequence of the new law.

At St. Petersburg College, a public university in Florida where most of the faculty is part-time, 250 have had their hours reduced for the fall term because the college said it can't afford to offer them health insurance.

St. Petersburg's president, Dr. Bill Law, said providing health care for the 250 adjunct professors would cost more than $777,000 a year. "The cost associated with making a part-timer benefits-eligible really is not available to us as a public college," said Law.

"I don't think anyone [passed the law] so they could make our life worse," said Law. "They did it because people need access to health care."

Part-time math professor Tracey Sullivan said she will lose half her income because of the cuts.

"I never thought it would impact me directly," said Sullivan. "I was stunned when I got the email...I love teaching at St. Pete College but that is a significant cut."

Many businesses are reluctant to talk about cutting hours for fear the public will view them as stingy or uncaring about their workers. But Goodridge said that many small businesses have very small profit margins and that while he already provides health insurance to senior employees, offering health insurance to many more workers would require him to pass a significant price increase on to his customers.

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"The consumer only has so much money in their pocket," he said. "I just don't feel, knowing my customers and knowing my business, now is the time to be raising prices."

In July, the administration announced that it had delayed implementation of the "employer mandate," which was supposed to take effect on Jan. 1. Now businesses with more than 50 workers will not be penalized for failing to offer insurance to full-time employees until Jan. 1, 2015.

Goodridge has given his Subway employees a reprieve until he hears more from the administration, but still plans to make cutbacks before the mandate kicks in. And other businesses that had already planned cuts have not necessarily delayed them. St. Petersburg college officials said they don't want to undo the cuts they've already made only to revisit them next year.

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While the small businesses and the union agree there's a problem, they disagree about the appropriate solution.

Some businesses want to raise the threshold to 40 hours. But Hansen said 40 hours would be a "gift to employers" that would simply allow them to continue to skirt the law by cutting workers off at 39 hours. Instead, Hansen and other union leaders have proposed lowering the threshold to 20 hours. They have also objected publicly to a tax provision of the ACA that impacts the health plans they already offer to some union members.

"We still support the act," said Hansen. "It does an awful lot of good things. We just want the administration and Congress, if they can, to fix it."

—By Lisa Myers and Carroll Ann Mears, NBC News.