U.S. Chamber-IFA Survey Shows Employers Already Facing Higher Costs, Cuts in Full-Time Jobs, and Fewer Expect to Offer Health Coverage Due to Affordable Care Act

Tuesday, November 12, 2013 - 7:00pm

WASHINGTON, D.C.—Research released today by the International Franchise Association (IFA) and the U.S. Chamber of Commerce shows the Affordable Care Act (ACA) is already resulting in higher costs of health coverage and businesses have cut full-time jobs, despite the one-year delay of the employer mandate. The research also shows when fully implemented, the employer mandate will result in large chunks of both franchise and non-franchise businesses no longer providing health coverage for their employees.

The new survey, conducted by Public Opinion Strategies, focuses on more than 400 businesses with 40 to 500 employees. Businesses of this size account for more than 42 million jobs and employ 25 percent of all Americans. The research shows that 31 percent of franchise and 12 percent of non-franchise businesses report they have already reduced worker hours because of the impending law, more than a full year before the employer mandate goes into effect. Additionally, 27 percent of franchise and 12 percent of non-franchise businesses have already replaced full-time workers with part-time employees because of the law.

“This research clearly confirms what the anecdotal stories have already conveyed. Small business owners are already cutting full-time jobs and reducing hours for many of their employees due to the ACA,” said IFA President & CEO Steve Caldeira. “This research should serve as a major red flag to Congress and the administration that unless there is a statutory change to the definition of a full-time employee in the ACA, there will be fewer full-time jobs, more part-time workers and fewer overall hours available for Americans to work as business owners adjust their workforce to comply with the law.”

“Instead of providing affordable health care coverage to employees, the law will effectively take hours and wages away from Americans who need and want full-time jobs,” said Bruce Josten, executive vice president for Government Affairs at the U.S. Chamber. “That’s bad for businesses and their employees.”

The research also shows that the ACA’s employer mandate will have a huge impact on businesses with 40 to 70 employees. Among those business owners, 59 percent of franchises and 52 percent of non-franchises, say that they “will make personnel changes to stay below the 50 full-time equivalent threshold.”

Additional findings include:

  • Sixty-four (64) percent of business decision-makers in franchise-owned businesses and 53 percent of non-franchisee-owned businesses believe the ACA will have a negative impact on their businesses.
  • Twenty-nine (29) percent of franchise and 41 percent of non-franchise businesses are already seeing health care costs increase due to the law.
  • Twenty-eight (28) percent of franchise and non-franchise businesses surveyed report that the employer mandate will mean they will drop coverage for their employees. In effect, among this segment of businesses, the employer mandate will almost double the percentage of franchise-owned businesses and more than triple the percentage of non-franchise businesses that will not offer health care.

IFA and the U.S. Chamber support bipartisan legislation introduced by Sens. Susan Collins (R-Maine) and Joe Donnelly (D-Ind.) titled the Forty Hours is Full-Time Act of 2013, which would change the definition of “full-time” in the ACA to 40 hours per week and the number of hours counted toward a “full-time equivalent” employee to 174 hours per month. IFA and the U.S. Chamber also support a number of bills that have been introduced by both parties in the House, including bills sponsored by Rep. Todd Young (R-Ind.), Rep. Dan Lipinski (D-Ill.), and Rep. Jack Kingston (R-Ga.). The website www.fortyhoursisfulltime.com was launched earlier this year to generate support for these bills.

“We urge Congress to pass bipartisan legislation to change the definition of ‘full-time’ to 40 hours per week to allow employers to grow, create jobs and equally important, give employees the additional hours they need and are accustomed to,” Caldeira added.

Read the full survey here.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.