Unconstitutional Law Leaves Trail of Job Destruction
Although Obamacare suffered a major blow to its constitutionality today, a great deal of damage from the law has already been done. For months, major employers have cited the law’s onerous regulations and taxes as the cause of layoffs.
EXPECTED JOB LOSSES: SALLIE MAE — THOUSANDS OF JOBS:
“The nation’s largest student lender has told 1,200 staffers in service centers in Killeen, Texas, and Panama City, Fla., they will lose their jobs by year-end. The remaining cuts will follow in 2011, resulting in nearly a third of the company’s total work force of 8,000 losing their jobs….
“Sallie Mae, which is based in Reston, Va., maintained the cuts result from changes made to the federal student loan program as part of the health care reform signed by President Barack Obama last month….
“The law is ‘not good for the company and it’s certainly not good for the employees,’ the CEO added during a conference call to discuss the results early Thursday. Losing federal student loans will result in a “draconian drop” in income from loan originations, Lord said.” (Eileen AJ Connelly, “Sallie Mae Job CUTS: 2,500 Jobs Slashed After New Student Loan Law,”The Huffington Post, 4/22/2010)
EXPECTED JOB LOSSES: MEDTRONICS — 1,000 JOBS:
“A large swath of the business community opposed the changes, arguing the legislation was too broad and had too many taxes. ‘This will make us one of the highest-taxed regions in the world, and that’s going to have an impact on the appetite for people to invest in medical innovation,’ said Bill Hawkins, chief executive of Medtronic Inc., which makes medical devices. He said his company could cut at least 1,000 jobs to absorb a new 2.3% excise tax on medical-device makers.” (Greg Hitt and Janet Adamy, “House Passes Historic Health Bill,”The Wall Street Journal, 3/22/2010)
INCREASED COSTS: AT&T — $1 BILLION; 3M — $90 MILLION:
“AT&T Inc. will book $1 billion in first-quarter costs related to the health-care law signed this week by President Barack Obama, the most of any U.S. company so far…
“Health-care costs may shave as much as $14 billion from U.S. corporate profits, according to an estimate by benefits consulting firm Towers Watson. AT&T employed about 281,000 people as of the end of January….
“AT&T’s announcement was followed about an hour later by 3M, the St. Paul, Minnesota-based maker of products ranging from Post-It Notes to respiratory masks. 3M said it expects a one-time expense of $85 million to $90 million after tax, or about 12 cents a share, in the first quarter because of the new law, according to a statement.” (Amy Thomson and Ian King, “AT&T to Book $1 Billion Cost on Health-Care Reform,” Bloomberg Businessweek, 3/26/2010)
INCREASED COSTS: JOHN DEERE — $150 MILLION; AK STEEL — $31 MILLION:
“Manufacturer John Deere announced Thursday that it expected the company’s expenses to be about $150 million higher than last year. That came a day after Caterpillar predicted a new cost of $100 million, and two days after AK Steel predicted a charge of $31 million.” (Dugald McConnell, “Health care law brings big costs for big companies,” CNN, 3/26/2010)
INCREASED TAXES: CATERPILLAR — $100 MILLION:
“Caterpillar Inc. said Wednesday it will take a $100 million charge to earnings this quarter to reflect additional taxes stemming from newly enacted U.S. health-care legislation….
“The charge is expected to be a one-time cost, but Caterpillar has argued that higher taxes and other potential cost increases related to insurance coverage mandates in the legislation will hinder the company’s recovery this year after a 75% plunge in income during 2009.
“‘From our point of view, a tax increase like this cannot come at a worse time,’ said Jim Dugan, a Caterpillar spokesman.” (Bob Tita, “Caterpillar Takes Hit on Health Care,” The Wall Street Journal, 3/25/2010)
Even House Democrats have been forced to recognize its economic impacts on affected businesses:
“When major companies declared that a provision of the new health care law would hurt earnings, Democrats were skeptical. But after investigating, House Democrats have concluded that the companies were right to tell investors and the government about the expected adverse effects of the law on their financial results.” (Robert Pear, “Inquiry Says Health Care Charges Were Proper,” The New York Times, 4/26/2010)