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Growth Strategies

Half of Small Businesses Will Cut Employee Hours to Avoid Obamacare Penalties

Guest Writer
2 min read
Opinions expressed by Entrepreneur contributors are their own.

Half of small businesses affected by the new national health-care law plan to either cut hours to reduce workers to part-time status or replace existing full-timers to part-time hours to get around Obamacare requirements, according to a new survey.

What's more, another 24 percent of companies answering the U.S. Chamber of Commerce's quarterly small-business outlook survey said they will reduce staff to under 50 employees to avoid paying penalties for failing to offer health insurance.

Anxiety about Obamacare is increasing, even as the administration has put off implementation of some key provisions. Forty-nine percent of small-business owners surveyed said Obamacare is a top worry for them, up from 42 percent in January. Seventy-nine percent believe Obamacare will increase the costs of health care at their companies.

Related: Health Care Reform: Procrastinate No More

And the biggest impact appears to be on hiring. In addition to cutting more workers to part-time status, many companies are curtailing hiring altogether. Just 17 percent of owners surveyed said they had added staff within the past two years. Just 20 percent said they plan to add workers over the coming two years.

That's not just Obamacare. There is an overall pessimism about the state of the U.S. economy, according to the survey. More than three-quarters of owners said the economy is on the wrong track, and just 26 percent said they saw signs of improvement over the past two years.

The results echo long-held worries by small-business owners about the impact of Obamacare, which some say will threaten an employment recovery. Much of hiring in the U.S. recently has been in companies below the 50-worker threshold. The most recent ADP payroll report, for instance, saw businesses with fewer than 50 employees add 84,000 workers in June, or 45 percent of the 188,000 total private-sector jobs added in the month.

There is one bit of potential good news for the Obama administration in the Chamber's survey: Small businesses overwhelmingly want immigration reform. Eighty-one percent surveyed said the current system does not work and needs to be fixed. Another 57 percent said immigration reform would strengthen the economy and help with global competitiveness.

Related: White House Plays Offense: Says Immigration Reform Will Turbocharge Entrepreneurship

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