Outrun Change

We need to learn quickly to keep up with the massive change around us so we don't get run over. We need to outrun change.

The new ‘49ers’ and ‘29ers’

No, there isn’t a new gold rush in California.

There is a stiff penalty to be paid for employers who have any person working more than 29 hours a week. There is also a serious penalty paid for hiring the 50th employee.

Why?

29ers

Employers with a staff person working 30 hours or more must provide health insurance to the employee or the company must pay a penalty. The insurance will cost several thousands of dollars a year. The penalty will be $2,000 if health insurance is provided.

Look at it this way – going from 29 hours a week to 30 hours a week increases the cost to the employer by at least $2,000 a year. For the extra 50 hours of work in a year the employer will pay $40 per hour beyond wages. On a weekly basis for a person paid $10 an hour, that means work hour number 30 will cost $50.

Redo the math if you want for someone paid $20 or $40 an hour. The 30th hour will cost $60 or $80.

49ers

With hiring its 50th employee, an employer must provide health insurance for everyone or pay a penalty for the previous 20 staff.

Here is the minimum cost –20 staff times $2000 equals $40,000.  That means hiring employee number 50 will cost an employer $40,000 in addition to salary and payroll taxes.

Companies are already adjusting

The Wall Street Journal points out the high cost of passing the 30 hour and 50 employee cutoffs in ObamaCare and the ‘29ers’.

The editorial also points out that employers are already cutting back hours of their staff.

Why now?

The measurement period for whether an employer has 50 or more employees started in January ’13.

Here’s the comment explaining the new ‘49ers’ and ‘29ers’:

Because other federal employment regulations also kick in when a firm crosses the 50 worker threshold, employers are starting to cap payrolls at 49 full-time workers. These firms have come to be known as “49ers.” Businesses that hire young and lower-skilled workers are also starting to put a ceiling on the work week of below 30 hours. These firms are the new “29ers.” Part-time workers don’t have to be offered insurance under ObamaCare.

Here’s the unsettling position lower skilled employees are in:

In some cases we’ve heard about, a local McDonalds has hired employees to operate the cash register or flip burgers for 20 hours a week and then the workers head to the nearby Burger King or Wendy’s to log another 20 hours. Other employees take the opposite shifts.

I’m worried we will hear of more and more ’49ers’ and ’29ers’. You can file this away in the unintended consequences category.

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3 thoughts on “The new ‘49ers’ and ‘29ers’

  1. Pingback: Local government agencies reducing part-time staff below 30 hours | Outrun Change

  2. I am not so sure that the 29′ers are unintended. A less than 30 hour work week is common in European countries. This makes for less official “unemployment.” It also makes the number of people in the “middle class” bigger by employing more lower class, and pulling more people down from the lower-upper class too. (Although the earnings of the “middle” class becomes lower as the whole curve goes lower, so the standard of living for the middle class goes down.)

    The 49′er policy, as well as the extreme tax increase on business owners earning over $250,000, will also encourage small businesses to stay small and even down size. Policy makers assume there will be more small businesses to take up the slack in meeting the market. This is another attempt at growing the middle class.

    This all is designed to “spread the wealth around.”

    The unforeseen consequence; It will also kill the economy. Discretionary income for most who now have it will dwindle. Our standard of living is going to go down and more goods will have to be bought from countries like China where the cost is less. There will be even less manufacturing jobs here in the States.

    There will also end up being less service jobs. Because of our not being able to compete with cheap foreign goods, the USA is more of a service centered workforce. Service is paid for with discretionary income. We become “do it yourself -ers”as our household income declines. Service oriented jobs will at first be spread out, but then disappear.

    Can you see the downward spiral continue from here?

    • Thanks for your comment.

      The frightening thing about unintended consequences is you can’t quite tell what they will be until they appear. The 49′er limit will create a serious block to growing small business. Rising costs and rising uncertainty are additional barriers.

      Thanks for reading.

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