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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4314  
Subject: Re: Sticking it to the lower-income folks Date: 1/7/2013 10:01 PM
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Here's some elementary math.

What if your total annual profit was $1.6 million? Your profit would be cut in HALF.

What if your total annual profit was $800,000? Your ENTIRE profit would be wiped out.

What if your total annual profit was less than $800,000? You would LOSE money.

If you make little or no money or lose money, you may not make an adequate living or your business may fail.


Figure in hiring costs (not trivial), the training costs, and all that you can easily get to a dollar an hour per each new employee. I highly doubt he is saving any money by adding employees. Every employee requires more supervision, more overhead, etc. More shifts means that there is more potential for an employee to be late or call in sick or what have you. Adding employees is not a good way to control costs.

Here is some even more elementary math. The employer is figuring health insurance costs roughly $2000 per employee per year. But he could skip that and simply pay $750 in higher taxes. I bet he'd come out way ahead.

But all that aside, the author of the blog post is making a critical competitive mistake due to lack of understanding:

But most of my competitors are small businesses that are exempt from the Obamacare hammer.

That's not true. Because small businesses necessarily pay more for health insurance, they get some tax breaks. But they still have the same requirements to provide health insurance. So if his competitors are offering insurance and he isn't, he'll have a problem attracting and retaining employees.

I suspect what will happen is that this guy's competitors will do the calculation I did above and conclude it is cheaper to provide insurance than it is to hire more employees and he'll wind up on the outside looking in.

FWIW, I ready industry boards on Linkedin and such every day and I have yet to seen anyone mention Obamacare as an industry consideration.
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