Employer Mandates A Concern For Business

Posted on November 15, 2009

The Nov. 1 guest column, “Economists have it all wrong,” accurately notes some of the concerns that businesses have with the increasing number of employer mandates.

Policymakers who favor a requirement that employers provide health care for employees should also recognize the traditional definitions of “small business” versus “large company” aren’t always appropriate.

Many small employers have a very high profit per employee. For example, investment firms generate tens of thousands of dollars in pure profit for a single hire.

On the other hand, some large companies employ thousands of workers in entry-wage positions. They operate on low levels of profit per each employee.

A play-or-pay mandate based on the number of employees disproportionately impacts these businesses. A $400 per year per employee health care premium would be less than 2 percent of the profit of a small investment firm but a devastating 20 percent of profits for a casual-dining restaurant.

Kristen Lopez Eastlick
Senior Economic Analyst
Employment Policies Institute
Washington, D.C.