With unemployment rapidly approaching 10 percent, one would think it would be a priority for Congress to make it easier for businesses to hire workers. But the health-care bill unveiled by House Democrats on Tuesday goes in exactly the opposite direction, actually making it more expensive to hire workers.
The bill would require all but the very smallest businesses to provide health insurance to their workers. Employers would have to pay 72.5 percent of the premium for individual coverage and 65 percent for family coverage. Those businesses that don't comply would be assessed a penalty or tax equal to 8 percent of their payroll.
Such a mandate is simply a disguised tax on employment. And while it might be politically appealing to claim that business will bear the new tax burden, nearly all economists see it quite differently.
Business owners care about the total cost of hiring a worker, not how that cost is apportioned between wages, taxes, health insurance or retirement benefits (or for that matter, a free parking space). Mandating insurance or assessing a new tax penalty simply increases the cost of hiring that worker.
Employers will therefore seek ways to offset the added cost by raising prices (the most unlikely solution in a competitive market), lowering wages, reducing future wage increases, reducing other benefits (such as pensions), cutting back on hiring, laying off current workers, shifting workers from full-time to part-time or outsourcing.
Most economists believe that the largest portion of those offset costs would come in the form of job loss, since workers are likely to resist wage reductions. READ THE REST
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