Democrat Tax on Jobs Will Hit Minority Workers Hardest
At Least 5.5 Million Workers At Risk
Health reform legislation released by House Democrat leaders includes numerous tax increases to finance significant expansions of government-run health care. One of these tax increases amounts to a tax on jobs—an 8 percent payroll surcharge for businesses who cannot afford to purchase coverage for their employees. In 2007, Harvard Professor Kate Baicker published an analysis demonstrating that, of the millions of workers likely to be impacted by the new tax on jobs, minority workers were twice as likely to lose their jobs as their white counterparts:
- Most economists agree that the cost of health insurance—including any benefits mandated by the federal government, or a payroll tax on jobs intended to finance the same—is passed on to workers in the form of lower wages. However, as the Congressional Budget Office recently noted, “a pay-or-play provision could reduce the hiring of low-wage workers, whose wages could not fall by the full cost of health insurance or a substantial pay-or-play fee if they were close to the minimum wage.”
- The 2007 analysis found that “33 percent of uninsured workers”—5.5 million total—“earn within $3 [per hour] of the minimum wage, putting them at substantial risk of unemployment if their employers were required to offer insurance.”
- The study also found that “among the uninsured, those with the least education face the highest risk of losing their jobs under employer mandates.”
- When calculating job losses, “more than 60 percent of [workers losing jobs] would be racial or ethnic minorities and about one-third would have less than a college education. The burden of the mandate would fall disproportionately on these groups since, for example, racial and ethnic minorities are only 30 percent of the workforce in this sample.”
- The Baicker paper only analyzed the impact of employer mandates on full-time workers. However, as the House Democrat bill extends this new tax on jobs to both full-time and part-time employees, many more than the 5.5 million workers cited in the article could be affected. Moreover, the 2007 analysis was conducted under much better economic conditions—meaning that job losses could also be higher now due to the economy’s current fragile state.
- Similarly, the Baicker analysis does not examine the impact of the half-trillion dollar tax increase on small business being proposed under the guise of a “surtax.” More than half of all high-income filers are small businesses reporting significant business income, and these additional taxes on small business owners—on top of the taxes on jobs imposed through the employer mandate—could destroy many more jobs than the 2007 paper projected.
At a time when more than one in seven African-Americans and nearly one in four teens are unemployed, these harmful tax increases would hurt exactly the low-wage and minority workers that health reform is intended to help. Further, raising taxes to finance new entitlements would help not control health care costs or rising federal spending and debt.