On the demand side, the elephant in the room is the Affordable Care Ac, what some call ObamaCare. Required family coverage under the act is expected to average more than $15,000 a year. For $15 an hour employees, that sum equals more than half their annual wage. Employers of low-skilled workers therefore are about to get hit with mandated benefit that will increase their labor costs by 50% or more.
To make matters worse, employers don't really know what insurance they will have to provide or what it will cost. The $15,000 number I refer to is an estimate by the Congressional Budget Office. Presumably, employers will have the option of paying a fine equal to $2,000 per worker if they don't provide the insurance. But does anybody think the fine is likely to stay that low? A lot of employers don't. The uncertainty created by all this is possibly worse than the actual monetary burden.
Add to all of this a Dodd-Frank banking bill that is encouraging bankers not to lend and you have a formula for perpetual stagnation — which is pretty much where we are.
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