Apple, Builders to Have Opposite Impacts in Second Half

Along with housing, jobs and health care will also be major issues in 2013. The United States has more than 100,000 small businesses with a staff size between 40-60 people. Many of these firms offer health insurance, but not "good enough" health insurance to avoid added costs from federal penalties.

Owners and shareholders who face extremely large annual penalties will have to question if it makes financial sense expanding the company. Obviously many will choose to wait and see, which in turn results in less remodeling work, building, training and all the other investments driven by expansion.

Of course, the workers who are not hired because of uncertainty and or known costs have less income and in turn spend less. Some will begin or continue to collect public assistance, some will commit crime, but all as a whole, will add less to the economy. They are casualties of war, the war on the free market by those who believe central planning works better for society. For more on this, read my article, Obamacare Will Crush Small Businesses.

Some companies will either add or improve their health insurance offering. I estimate most companies on the fringe will go this route. What so many who approve of government mandates miss, is that health insurance costs can not be paid for with premiums grown from magical trees. All health care costs have been and will always be paid by workers.

Instead of workers and employers deciding what is best in their given situation, the government has removed their say in the process and replaced it with regulations.

If any given employee is worth $32,000 a year to a company, it is reasonable to assume $30,000 is the salary offered. The employee doesn't actually see all of the salary, though. Some is hidden, and some is invested, and some is used to pay for government-mandated items the employee is required to buy.

The employer is required to take out of the employees pay FICA at 13%, retirement contribution at 5%, unemployment insurance 3%, health insurance 8%, and other costs of 5% (admin, training, etc.). The net result is the employee receives a paycheck (before federal and state taxes are removed) of about $19,800. (Kind of makes you sick how much is taken out, but it's about to get worse.)

If an employer is faced with having to spend another $170 per employee for health insurance, it no longer makes financial sense continuing to employ this person. Instead of firing the person, a reduction of $2,000 in pay (plus the lowered FICA etc.) down to $17,800 will maintain the relationship.