Federal health care bill keeping job creation on hold

by Byron Schlomach, Ph.D.

Goldwater Institute

The nation’s high unemployment rate has barely fallen this year, in part because many businesses are waiting for the other shoe to drop from federal health care reform.

At this point, business people can only guess at what new employees will cost in the near future. Already, health care benefits constitute almost 8 percent of the total cost of an employee. Though these costs were rising before, they did so predictably.

Now, the Arizona Department of Administration has warned of a previously unexpected 37 percent increase in state employee health care costs due to federal reform. That follows announcements by John Deere and AT&T of unexpected expenses of $150 million and $1 billion, respectively, also due to the federal health care bill.

Michael Fleisher, president of Bogen Communications in New Jersey, recently wrote of an unexpected and extraordinary 28 percent increase in his company’s health insurance premiums. “As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company’s vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment,” he wrote in the Wall Street Journal.

Similarly, Steve Wynn, the hotel-casino magnate, while discussing new ventures in China, told CNBC, “No one in the (U.S.) business community from one coast to another has any idea what’s next…The uncertainty of the business climate in America is frightening, frightening to everybody, and it is delaying a recovery.”

Add the many thousands of regulations yet to be written to the current almost-3,000 pages of health reform legislation. It’s no wonder that entrepreneurs are skittish. The certainty needed to inspire widespread job growth will only return when this “reform” is stopped.

Dr. Byron Schlomach is an economist and the director of the Center for Economic Prosperity at the Goldwater Institute.


  1. Cactus Bill says

    Please forward the name of the Dept of Revenue expert that was surprised and please forward the name of his/her supervisor so that we may inquire how or why this person still has a job.

  2. How Democrats “improve” the system to make it “fair.”

    The Left also has a very bad practice of deciding that killing off people is the perfect solution to life’s problems. Their proposed budgets always work with fewer people, their social issues always resolve if one of the opposing parties is eliminated, the problem of baby versus school or work, is baby goes, school or work trumps. The problem of families spending their resources on caring for their elderly parents and needing medicare help is resolved with “humanitarian” euthanesia. Voila! More disposable household income when granmama is disposed of!
    Which the Democrats can then TAX.

  3. Doubtlessly Steve Wynn and other billionaire CEOs would prefer to see taxes and workers benefits much lower since these cut into corporate profits and lower their bonuses and the values of their stock options. What Dr. Schlomach fails to do is provide any reason we should take these unsubstantiated, self-serving statements at face value.

    In the real world, the economy is driven by the buying and selling of goods and services, not the claimed unease of CEOs. The fact is 70% of the US economy is driven by consumer spending and most consumers have seen the value of their biggest investment take a nosedive thanks to the housing bubble. People aren’t spending money because they don’t have it. Businesses are not expanding because they don’t even have the demand for what they are doing now. This is clear from the fact that average weekly work hours are still far below what they were before the recession hit because demand is so weak.

    As for Steve Wynn, the real reason he isn’t expanding in the US is because he has had to cut his US resort room rates in half from pre-recession times in order to attract consumers. Most of his company’s profits are coming from the Chinese mega-casinos even though he has gotten sweetheart deals in Nevada of a 6.25% tax on gaming instead of the 40% in Macau. Of course in China he has received huge benefits from the massive Chinese government spending on infrastructure and economic stimulus.

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