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The working poor discover 29 + 49 + 89 adds up to less money & still no healthcare

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POSTED August 28, 2013 1:02 a.m.

During the early stages of the foreclosure crisis I got into a heated phone exchange with Congressman Jerry McNerney’s communications director.

He had stridently taken exception to a column I penned criticizing the congressman for backing a bill that ultimately became law allowing a blanket forgiveness of tax debt related to mortgage balances banks were writing off on homes that went into foreclosure.

I had called it irresponsible to not include a litmus test in the bill requiring those who were allowed to walk away from sizable tax obligations after they defaulted on mortgages to prove that they didn’t have the financial assets to make the payments.

The communications director, who happened to be 25 years old and never had a mortgage, said I was an idiot since no one who could make their housing payment would walk away from their home.

I asked if he had ever lived in California. He replied he hadn’t and that he was from Illinois. I proceeded to give him a quick primer on California housing prices that irked him greatly.  In responding he raised his voice in anger saying I was cynical and called me an idiot again. I ended the call.

We all know what happened. Fairly well positioned people saw the tax forgiveness as a way to get out from under a home that they could afford but had dropped significantly in value. They used the free tax card to get into a new home that in most cases was even nicer but cost them less per month. That helped to prolong the housing malaise.

I never doubted the sincerity of McNerney’s intentions. What I questioned was a sweeping one-size-fits-all federal approach that could have unintended and dangerous consequences.

What Congress did to “help” with the “housing crisis” parallels what they did to “help” the so-called “national healthcare crisis.”

The one-size-fits-all approach requires businesses with 50 or more workers to offer health plans to “full-time” employees working 30 or more hours a week or face stiff financial penalties. Given that a lot of other federal regulations also kick in at 50 employees, the healthcare requirement has created a tipping point for more and more firms to cap employment at 49 workers. Meanwhile many firms with 50-plus workers are now capping new hires to 29 hours.

The new math for healthcare is straightforward: 29 + 49 = Less hours and therefore less pay.

The 29/49 effect that zealous defenders of the Affordable Healthcare Act dismiss as being inconsequential is spreading rapidly through the small business sector. And it is doing so in ways that threaten to make the drive for universal healthcare in its current form an expensive proposition for struggling workers in low-skilled jobs.

The latest bizarre employment practice that the Affordable Healthcare Act has helped create comes courtesy of Mi Pueblo, an independent specialty supermarket firm.

Based on reports from terminated workers, Mi Pueblo has mutated traditional employment practices due to Obamacare in order to survive in the razor thin profit marginworld of retail grocery sales.

It is hiring people and employing them 40 hours-plus for 89 days and then on the 90th day giving them the option of part-time work capped at 29 hours a week or showing them the door. Ninety days is the limit of the probation period where employers under California law are allowed to dismiss you without cause. It also is the employment time that apparently establishes your status as full-time versus part-time.

A good number of the terminated employees do the math and discover they would net more money on unemployment than they would working part-time. Some find another employer that needs the same skill sets — and part-time labor to keep costs down under Obamacare. As a result some former full-time Mi Pueblo workers are now working part-time for that grocery chain and part-time for another supermarket.

That wasn’t what Congress had in mind.

It is not a universal practice since the more skills a worker is required the less advantageous financially such a move is for an employer due to training and hiring costs.

Ironically, though, the very people the Affordable Healthcare Act was supposed to help the most — the working poor — are being hurt the most.

Not only are the new employment practices many small businesses such as fast food, supermarkets and such are using when it comes to low-skill workers making it impossible for them to qualify for healthcare benefits but it is also reducing their hours of employment. That in turn takes more money out of their pockets.

The bottom line: Congress’ affordable healthcare plan crafted by Obama operatives as a sweeping one-size-fits-all approach could end up as the financial death of the working poor.



This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at dwyatt@mantecabulletin.com or 209-249-3519.

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