Healthcare Reform Will Have Unintended Consequences for the US Economy in 2014

Nov. 2, 2012
An unintended consequence of the healthcare reform impacts part-time workers and plays into our 2014 recessionary outlook for the American economy.

Many great ideas, and not-so-great ideas, are undertaken without regard to the always-present Law of Unintended Consequences. While they are unintended consequences, they are nevertheless very real and often painful.

Healthcare reform presents an example of this law. We will not discuss the benefits or drawbacks of the reform in general, and we will not label it good or bad. It is the law of the land now, and we can begin to look at what the impact may be. It would appear that one of the unintended consequences is that part-time employees will be making less money in the future. 

Consider the quick serve food industry. McDonald’s, Burger King, Arby’s, and the like all employ a legion of part-time employees. They often work up to 30 hours a week, which currently keeps them from being considered full-time employees. The healthcare law changes the threshold to 30 hours. Anyone working 30 hours or more must be eligible for an exchange plan if one is not provided through the employer. The employer must contribute $2,000 toward the exchange for these employees should they opt into the exchange. 

The fast-food industry has no intention of doing this. Instead, they will reduce the number of hours these folks work to about 25. The reduction of five hours a week is meaningful to these folks as they save for college or work to make ends meet. The employers will have to hire more people, train them, schedule them, and manage them, all of which leads to decreased efficiency. None of this leads to more people insured.

Reduced earnings, reduced efficiency and thus profits, and no real help for those involved. As for the economy, the impact is potentially one more “paper cut” contributing toward the downturn we see coming in 2014. The Law of Unintended Consequences is not often favorable, and this is certainly not an exception to the general rule.  

About the Author

Alan Beaulieu Blog | President

One of the country’s most informed economists, Alan Beaulieu is a principal of the ITR Economics where he serves as President. ITR predicts future economic trends with 94.7% accuracy rate and 60 years of correct calls. In his keynotes, Alan delivers clear, comprehensive action plans and tools for capitalizing on business cycle fluctuations and outperforming your competition--whether the economy is moving up, down, or in a recession.

Since 1990, he has been consulting with companies throughout the US, Europe, and Asia on how to forecast, plan, and increase their profits based on business cycle trend analysis. Alan is also the Senior Economic Advisor to NAW, Contributing Editor for INDUSTRYWEEK, and the Chief Economist for HARDI.

Alan is co-author, along with his brother Brian, of the book MAKE YOUR MOVE, and has written numerous articles on economic analysis. He makes up to 150 appearances each year, and his keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends. 

Prior to joining ITR Economics, Alan was a principal in a steel fabrication company and also in a software development company.

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