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Home Publications Blogs Beat the Press Will the ACA Hurt Employers: Morning Edition Says It Depends on How They Feel -- see Addendum

Will the ACA Hurt Employers: Morning Edition Says It Depends on How They Feel -- see Addendum

Friday, 29 June 2012 04:34

Reporters at NPR have the time to look up the requirements of the Affordable Care Act and calculate their impact on employers. Its listeners do not. For that reason, it is incredibly irresponsible to simply report the views of one small business owner saying the bill will be a big burden and then another who says it will guarantee him and his wife insurance.

Morning Edition could have taken 30 second to give listeners an idea of the size of the burden that the ACA imposes. For firms that employ fewer than 50 workers, there are no requirements. Firms of 50 workers or more must either provide insurance or pay a penalty.

The size of penalty is $2,000 per worker, with the first 30 workers exempted. This means that if a company employs exactly 50 workers (as could be the case with the employer profiled), then the company would have to pay a $40,000 fine. If the average pay for a worker is $10 an hour (in other words, everyone gets close to the minimum wage), this fine would add 4 percent to the company's wage bill. If the employer currently pays for some care (as the employer profiled claimed he did), he would be able to stop paying for the care, which would offset much or all of this cost.

By comparison, past minimum wage increases have been on the order of 15-20 percent. Extensive research has found that these increases in labor costs have had little or no impact on employment, meaning that firms have been able to absorb this additional expense without substantially changing their operations. This research suggests that the burden imposed by the ACA would have relatively little impact on business.

[Addendum: I apologize, this is much worse than I thought. Jonathan Lundell calls my attention to Balloon Juice, which reports that NPR's small business owner, Joe Olivo, is apparently a regular on news shows and at congressional hearings, appearing most recently the prior night on NBC. Apparently he is a spokesperson for the National Federation of Independent Business (NFIB).

There is nothing wrong with presenting the views of the NFIB, but they should be identified as such. NPR misled its listeners when it presented Mr. Olivo as a random small business owner whom they happened to stumble upon.]

Comments (16)Add Comment
NPR, Naive Nittering Nabobs of Negative Nihilism
written by Last Mover, June 29, 2012 6:59
For economic purposes, NPR is stuck in the journalistic stone age of depending on primary "sources" to validate the truth of a report and couch it in a "story" for "context".

It doesn't work in economics because economics doesn't depend on the same kind of "facts" as other reporting for which most reporters are more comfortable.

Yet NPR continues to treat listeners as children sitting in a circle listening to the reporter tell a story in chit chatty fashion designed to make it approachable and "realistic", all the while gutting and paring down the message into meaningless mush.
The Rush Limbaugh School of Journalism
written by Ron Alley, June 29, 2012 7:17
NPR (and other mainstream media as well) struggle to emulate the journalistic success of the Rush Limbaugh school of journalism. Rush invites callers to disagree with his point of view and then smacks those dissenters down with belittling sarcasm to the delight of his sycophantic audience.

With two mouthpieces articulating competing political talking points, listeners on each side of an issue can delight in their champion smacking down the other side's champion. Since NPR invites speakers who, for the most part, refrain from from Rush's blatant belittling sarcasm, NPR can pretend it has presented a coherent debate on the merits of an issue. In doing so NPR evades responsibility for reporting the facts and presenting serious, informed analysis of the issue.
Thank you, Dean!
written by david, June 29, 2012 7:58
Thanks for putting this here, Dean. Your timing was perfect. I've been able to allay the fears of two 'centrists' who listened too much to reports like NPR's. NPR has lost their touch, as far as journalism goes. I know two very good journalists who left the field because of this trend (to communicate lies without critical reporting) in their profession.
written by JMW, June 29, 2012 8:05
More "He Said, She Said" reporting from NPR. Furthermore, they gave an AHIP shill 3 minutes to spew industry "the sky's falling" lies unchallenged. Very balanced.
open another firm
written by pete, June 29, 2012 9:19
I have met many folks with the under 50 issue. There are many more federal regs which already kick in at 50 which somehow congress decided was a magic number. Suppose somebody has a landscape business with 48 people but wants to expand to 70 folks. Why not start another business with 22 folks? A little cumbersome, but for low margin companies with high labor usage, a 4% increase could be fatal. Then I guess the workers have to pay the tax. Tying health care to business, as in Obama care, is a silly idea. Eliminating high deductable plans is also silly. When there is serious opposition, gotta wonder what the problem is, rather than assuming it is fictitious. Clearly the SEIU which wrote the plan saw it as a way to increase its membership, increased health care workers. Health care workers do not otherwise benefit from the plan, since they already more than likely have coverage. Do the math. Follow the money.
sub/contracting costs
written by david, June 29, 2012 9:37
pete asks:
Suppose somebody has a landscape business with 48 people but wants to expand to 70 folks. Why not start another business with 22 folks? A little cumbersome, but for low margin companies with high labor usage, a 4% increase could be fatal.

The disincentive is hidden in the 'a little cumbersome.' Overhead is not 'a little cumbersome' to a low margin company where a 4% increase would be fatal. Do they have the margin to open yet another business? A company doing that much business is going to carry liability insurance too; what if they got a 4% hit on that and went under? Those are not stable businesses. Culling the weak, isn't that something conservatives can get behind?
written by PeonInChief, June 29, 2012 10:08
The employer might well face having to hire new workers, as the $10 per hour workers would be able to get better subsidized insurance and find a job paying better wages. I think that's what many small businesses fear--that employees will decamp much more frequently.
written by kharris, June 29, 2012 10:39
Unlike any other news organization, NPR has the staff of "Planet Money" to call on for help in dealing with economic and financial issues. At some level, there has to have been a choice not to use the knowledge available from one of the best economics teams in broadcasting. NPR reporters have to work harder to be bad than reporters at most new outlets, because they have to avoid going down the hall to ask obvious questions of people who know where to look for answers.
written by Ecletic Obsvr, June 29, 2012 11:05
Employers in our system who do not provide health insuranace or contribute to it are "free riders" on public sources. I realize that the political environment is a constraint but it would make sense to tax those employers that don't provide a minimally acceptable plan or otherwise provide a means to obtaining the insurance. The rule of 50 doesn't have much meaning since it allows small concerns to be 'free riders' more than larger ones. This is very true for many small businesses that employ low wage earners. Still while the ACA is better than nothing-- a single payer system or one like Germany and France are superior to our dismal state.
It's easy to be lazy
written by Downpuppy, June 29, 2012 12:05
Sometimes it's just not thinking "what if they're even worse?"

Dean, for example didn't look up Joe Olivo, and find that the Small Bidnessman was a regular NFIB stooge that gets sent out for all these interviews.
Director of Regulatory Affairs
written by John, June 29, 2012 12:51
Opening a new firm, by itself, would not work. The fifty number is an aggregate of "affiliates." Congress anticipated this loophole and so long as there is common ownership, interlinking boards, and the like, the companies will be treated as one for ACA purposes.

The number of 50 employees was selected because that is the number used in Nation Labor Relations Act as the test for whether a business effects interstate commerce.
culling the weak or monopolization...
written by pete, June 29, 2012 1:29
getting rid of small businesses due to increasing their overhead through regulation, typical big business capture tactics, is different than culling the weak...i would think the economics of that are pretty clear. certainly big labor and big business have often united to dump on small businesses.
monopolization ...
written by david, June 29, 2012 2:49
good point, pete. Still, there has to be some boundary point where it makes sense to start fining/taxing businesses that don't provide healthcare options for their employees, just where on the curve are we going to do it? I've not gone through the actuarial analysis, but perhaps that first step at 50 employees could be a smaller percentage ( progressively increases from 2% to 4% over the range of 50 to 100-200 employees?). There's a large pool of businesses of this size, perhaps there's a business opportunity there for the insurance companies. But how best to provide big-scale costs to the Balkanized group of small businesses? Single payer would be a very good option.
written by James, June 30, 2012 1:36

= National Propaganda of Republicann't.
Poor NPR
written by James, July 01, 2012 9:31
Speaking of shills, in its zeal to be seen as ever-so-impartial, PBS has become so politically correct that it's programming has become truly stick-your-finger-in-your throat nauseating. For example, when was the last time you heard Terry Gross say any anything remotely unenthusiastic about any one of her many guest artists, however lame? PBS has become (almost) the most boring station on radio, and PBS TV is not far behind in its own medium. Why people continue to donate money to such a la-de-da organization is simply beyond me. Who took the public out of public radio? PBS, get some balls.
written by kharris, July 02, 2012 7:57

Terry Gross isn't in the line of work you think she's in. Her approach is a sort of current biography/culture view, not an investigative journalism sort of thing. If you don't hear what you expect to hear, perhaps it's because you are expecting to hear what you hear elsewhere. She can't interview Poppa Bear every time.

But, yeah, in general, NPR is sucking more every year.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.