In the form of having their hours of employment cut to avoid the (delayed) employer mandate in Obamacare:
The predictions and fears of the Affordable Care Act’s adversaries have begun to materialize, specifically fears that the law will encourage employers to demote their employees to part-time positions in order to evade federal health care requirements. Popular clothing company Forever 21 is the first of what might be many companies to limit its non-management workers’ hours to 29.5 a week, just below the 30-hour minimum that the ACA deems full-time work.
Explaining that the company “recently audited its staffing levels, staffing needs, and payroll in conjunction with reviewing its overall operating budget,” Associate Director of Human Resources Carla Macias informed employees that effective August 31, they will no longer be full-time employees of Forever 21.
It is a move that will likely harm the reputation of the company, will absolutely harm the economic circumstances of its employees, and will function as a tangible example of the Affordable Care Act’s consequences and shortcomings.
Although the ethical nature of Forever 21’s decision is debatable, it is both rational and understandable. A company that boasts regularly low prices and frequent, sensational sales, Forever 21’s competitive success is largely dependent upon its ability to maintain low manufacturing and operational costs. The ACA is an undeniable burden on this principle, and Forever 21’s management has the prerogative to take any legal measures necessary to avoid raising the costs of its products.
Contra Ms. O’Neill at Policymic, who does a good job with the economics of Forever 21’s dilemma, I don’t think the ethics are debatable at all. Forever 21’s management owes a fiduciary responsibility to the company’s owners to return the most profit at the least cost while staying within the law and the laws of good business. This is their primary duty. They owe their employees nothing more than what is required under law and the overall decent treatment again dictated by good business sense. (Happy employees leading to less turnover and higher productivity.)
What they do not owe their employees is anything that actually harms the business. As the article reports, Forever 21’s business niche is as a provider of low-cost clothing, presumably mainly to a budget-conscious student and working-class clientele. To do this, they have to keep costs down. Obamacare makes this impossible with regard to health care benefits (1), so the managers are faced with three choices:
- Pay for insurance as required under Obamacare and accept a lesser profit margin in a business that’s already low-margin, thus betraying their primary duty to their owners;
- Pay for insurance as required under Obamacare, but increase prices to the consumer, thus hurting Forever 21’s competitiveness and probably lessening profits, again violating the main reason any business exists;
- Adapt by controlling expenses, in this case by reducing employee hours to avoid the employer mandate’s tripwire.
In the end, they still probably harm their business, assuming a higher instance of unhappy employees, but it’s the least harmful option that also meets management’s primary responsibility — to create a profitable business for the owners. It is, in fact, the unquestionably ethical choice.
As I’ve said before, I feel sorry for anyone seeing their hours cut, but don’t blame the company, which is simply making a rational choice. Instead, lay the blame directly where it belongs, with the Democrats who voted for it and their Leftist and Big Business enablers who shoved this anti-constitutional monstrosity down our throats, thus creating the perverse incentives that lead to Forever 21’s decision.
And, to the extent that any of you seeing your hours cut voted for Barack Obama and the (Social) Democrats, blame yourselves, too.
Elections, as they say, have consequences.
via Bryan Preston
(1) And maybe their other costs, too, as their suppliers will likely have to meet Obamacare’s mandates and thus pass the costs along in the form of price increases.
(Crossposted at Sister Toldjah)