It seems like there is a sudden resurgence in the buzz surrounding the Affordable Care Act (ACA) despite the fact that the recent “final” employer mandate regulations effectively delayed the mandate again. Maybe it’s because workers are now required to carry insurance. Maybe companies are simply being proactive. Whatever the reason, we are finding more recruiters are wondering how this will affect hiring and their recruiting business.
In a recent report, the Congressional Budget Office (CBO) estimates the ACA could lead to a decrease of 2.5 million jobs by 2024. They are attributing the bulk of those losses to people who voluntarily leave the workforce because they no longer have to rely on a full-time job to obtain health insurance. Obamacare created The Marketplace where they can shop for insurance, and it also expanded the Medicaid program. But the CBO expects the employer mandate to also play a role in the decrease of jobs. The employer mandate will require employers with 50 or more full-time or full-time equivalent employees to provide healthcare insurance that provides “minimum essential coverage” to full-time employees. The CBO expects employers to reduce their workforces or cut hours to avoid the penalty. While this has not yet materialized, the CBO noted the penalty for not offering coverage does not kick in until 2015 (and even later for some employers, based on the employer mandate final regulations).
This is not what any recruiter wants to hear. But it’s not all doom and gloom. Many companies will be unable or unwilling to cut hours or put off hiring because doing so would likely hamper their ability to grow. Instead, they will turn to contractors. As a result, Obamacare is going to further drive the growth of contract staffing. Some recruiters are already seeing contractors working longer assignments because they are no longer being used just to complete a short-term projects. Instead, they are being used as part of a blended workforce model as we discussed in our most recent Contracting Corner. In this model, companies maintain just a small core of traditional employees who are the key personnel with the knowledge and experience that can make or break the business. That core is surrounded by a larger outer ring of contractors who handle the day-to-day tasks and critical projects.
Many recruiters we work with are positioning themselves to take advantage of this trend. They are actively promoting their contract staffing services and learning all they can about the ACA so they can serve as a resource for their clients. And they are aligning themselves with a contract staffing back-office that can handle all of the financial, administrative, and legal tasks, including providing ACA-compliant healthcare coverage, so the recruiters can concentrate on helping their clients navigate the ACA and its employer mandate. Recruiters who are wondering how they will be affected by this law and how to respond would be wise to take their lead.
Only time will tell what the true impact of Obamacare will be, but by establishing yourself as a partner to your clients who are grappling with this complex law, you can help ensure a positive outcome for both you and them.