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Obamacare may lead to outsourcing jobs

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Posted: Wednesday, November 21, 2012 12:00 am

Hidden in Obamacare is an employer tax that must give businesses pause in business strategy. Never before has legislation encouraged businesses to contemplate shrinking their operations and outsourcing jobs overseas.

Businesses with over 50 full-time employees must pay a tax of $2,000-$3,000 per employee in 2014, with the tax increasing significantly yearly thereafter if employees have no health insurance. Obamacare has a hidden complication that will result in financial hardship.

I recently had a meeting with a CEO of a national business with 5,000 employees. 2,500 are full-time employees with comprehensive benefits. The other 2,500 employees are part-time. Under Obamacare, two part-time employees working 15 hours per week will be counted as one full-time equivalent employee for determining the tax. In their scenario, they will pay Obamacare taxes on 1,250 employees.

Stores like Best Buy, which is famous for its Geek Squad part-time employees, will now have to increase the cost of their products to offset the massive new taxes they will pay. All Best Buy has to do to avoid massive taxes and penalties is to outsource Geek Squad overseas. Since they are in financial trouble already, outsourcing must be considered if they want to stay in business.

It has become very expensive to hire employees. Between minimum wage for unskilled labor, matching FICA, benefits, worker compensation, unions, employee lawsuits, government compliance expenses and now Obamacare, China and India are looking very attractive.

Let's thank the voters for electing Obama again. Say goodbye to jobs!

Darrell Baumbach


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