Goldwater Institute Daily
August 26, 2010

Federal health care bill keeping job creation on hold
by Byron Schlomach, Ph.D.

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.