Because of its extensive regulatory impact and pervasiveness in burdening American businesses, the Patient Protection and Affordable Care Act (PPACA) threatens to undermine the still-fragile American jobs recovery. Companies will face disincentives to hiring and will be encouraged to move more workers from full-time to part-time in order to bypass some of the law's most harmful measures, says Diana Furchtgott-Roth, a senior fellow with the Manhattan Institute.

• According to an announcement by the Labor Department, the unemployment rate held steady at 8.3 percent in March 2012.
• However, this fails to capture a number of potential American workers that, discouraged by the poor employment prospects, left the labor force over the course of the recession -- labor force participation rate has declined from 66 percent in January 2009 to 64.9 percent today.
• Including these workers, the unemployment rate climbs to an astounding 14.9 percent.
• Enter the PPACA.  The new tax, which will be phased in in 2014, will impose a $2,000-per-employee tax on businesses employing 50 workers or more if they fail to make available generous, government-approved health care plans.

• Under this system, and allowing for financial provisions that attempt to ease the transition from 49 to 50 workers, businesses that do hire that 50th worker will face an additional $40,000.
• The $2,000 tax will amount to 15 percent of average annual earnings in the food and beverage industry and 9 percent in retail trade.
• Businesses can avoid the tax by moving full-time employees to part-time work -- this will exacerbate the problem that in January 2012 over 8 million people were already working part-time because they could not find full-time jobs.

Furthermore, the hardest-hit populations will be those with the fewest skills.  This is because the penalty is a higher proportion of their compensation than for high-skill workers, and employers cannot take the penalty out of employee compensation packages.  This primarily hits younger workers.

• Of the 2 million adults who found jobs over the past year, 1.7 million are over 55 years old, and 300,000 are between age 25 and age 55.
• The unemployment rate for adult workers with less than a high school diploma is 12.9 percent.
• Teens face an unemployment rate of 23.8 percent.
• The imposition of the ACA will further weaken the market for these workers.

Source: Diana Furchtgott-Roth, "How ObamaCare Increases Unemployment," Manhattan Institute, March 2012.

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