We Bet You Haven't Heard This About Obamacare

by Amy Payne, Heritage Foundation, December 5, 2013

The plan on the table in Congress would raise the federal minimum wage above $10 an hour (which is higher than all existing state rates). Obamacare’s mandate on employers, however, is already scheduled to raise the hourly cost of hiring a full-time worker past $10 an hour.

>>> See how much Obamacare adds to labor costs in your state

The idea behind a minimum wage is to help low-income workers. But Obamacare’s mandates will hurt the job prospects of these very workers—and raising the federal minimum wage would further limit the number of jobs available.

Combining federal (or state) minimum wage rates, payroll taxes, unemployment insurance taxes, and soon Obamacare’s employer mandate, employing a worker full-time will cost a minimum of $10.30 an hour. The government has made hiring more costly without raising workers’ pay.

Unfortunately, this will make entry-level jobs harder to get. And these jobs are important. For the majority, they are stepping stones to higher pay and higher-skilled positions. As Heritage’s James Sherk and Patrick Tyrrell explain:

Two-thirds of minimum wage workers earn raises within a year. Entry-level jobs pay off in the long run for many workers. But if Congress adds a minimum-wage hike to the Obamacare mandate, many employees will never get that chance.

Of course, companies with 50 or more employees can avoid Obamacare’s mandate by cutting workers’ hours below 30 hours per week. An increasing number of employers announced plans to do exactly that before the Administration delayed the mandate a year. Fewer hours is not a good outcome for workers.

People looking for work—or trying to hold down a full-time, minimum wage job—are victims of Obamacare. Adding this minimum wage hike would bring the minimum cost of hiring a full-time worker to $12.71 an hour. This, as Sherk and Tyrrell put it, “would cut the bottom rung off many disadvantaged workers’ career ladders.”

For health reform that would help workers instead of hurting them, check out this alternative.

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