Report: 300,000 Small Business Jobs Lost Due to Obamacare

Over 10,000 small business establishments shut down due to health care law

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Obamacare has cost roughly 300,000 small business jobs due to higher health care costs, according to a new report.

The American Action Forum, a center-right policy institute, released findings Wednesday that rising premiums and regulations under the Affordable Care Act have had "dire" consequences for the labor market.

The report found the law has cost $19 billion in lost wages per year and forced 10,000 small businesses establishments to close their doors. The study covered employers with 20 to 99 employees.

"Research from the American Action Forum (AAF) finds regulations from the Affordable Care Act (ACA) are driving up health care premiums and are costing small business employees at least $19 billion in lost wages annually," the report said. "These figures varied by state, but in 2015 the ACA cost year-round workers $2,095, $2,134, and $2,260 in Ohio, New York, and North Dakota, respectively."

"Premium increases, a prospect regulators predicted when issuing the first ACA regulations, also significantly diminished the number of business establishments and jobs nationwide," the report said. "Across the country, small businesses (20-99 workers) lost 295,030 jobs, 10,130 business establishments, and $4.7 billion in total wage earnings. Florida lost 17,950 jobs; Ohio lost 19,000; Pennsylvania lost 15,680; and Texas lost 28,010 jobs due to higher sensitivity to rising health care premiums and the ACA."

Ben Gitis and Sam Batkins, the authors of the report, used data from the U.S. Census Bureau, the Medical Expenditure Panel Survey, and the Bureau of Labor Statistics for their findings.

The report used different data sets for small businesses with less than 50 employees, which were exempt from the law's employer mandate. However, this group also suffered job losses and lower wages after Obamacare went into effect. The paper compared data from up to six years before the law was passed to show a clearer picture of Obamacare's impact on small business.

Before Obamacare became law, workers still saw an increase in their average weekly pay when health insurance premiums went up.

"After the ACA became law, however, a one percent increase in total premiums was associated with a 0.012 percent decrease in average weekly pay," the report said.

The numbers add up to roughly $3.9 billion in lost wages for small businesses with between 20 and 49 workers, which account for 20 million workers in the United States. The average worker for those businesses has lost $1,202 in annual pay.

Aside from wage losses and job cuts, Obamacare has cost the economy $51 billion and added 172 million hours of paperwork through regulations, the American Action Forum said.

"To put that in perspective, it would take more than 86,200 employees working full-time (2,000 hours annually) to complete a year of new ACA paperwork, roughly the population of Miami Beach, Fla.," the report said.

The incoming Donald Trump administration has vowed to repeal and replace Obamacare, and congressional Republicans have already begun the process to repeal the health care law through the budget reconciliation process.

"There are many reasons policymakers have called for significant amendments to the ACA," the American Action Forum said. "Higher premiums are typically cited as a top concern. However, these higher premiums have broader consequences for the labor market. As AAF’s research has shown, ACA regulations have contributed to at least $19 billion in lost wages, 10,000 fewer establishments, and nearly 300,000 lost jobs.

Elizabeth Harrington   Email Elizabeth | Full Bio | RSS
Elizabeth Harrington is a staff writer for the Washington Free Beacon. Elizabeth graduated from Temple University in 2010. Prior to joining the Free Beacon, she worked as a staff writer for CNSNews.com. Her email address is elizabeth@freebeacon.com. Her Twitter handle is @LizWFB.

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