The issue of mandating employer-paid insurance has been a controversial topic in the United States. The proponents of this policy argue that it will help provide health coverage to low-paid workers. Mandating employer-paid insurance is likely to lead to a permanent loss of jobs because it increases the labor cost for employers and may force them to reduce their workforce or cut back on employee benefits.
The long-term effects of mandating employer-provided insurance, such as healthcare or other benefits, may be detrimental to low-paid workers. This is because offering insurance to employees entails greater expenses for businesses, which they may attempt to counteract by making other cuts to spending (Phelps, 2018). Employers would eventually shift the financial cost of the mandated insurance plans back to the workers, resulting in a reduction in wages for the workers (Freiberg, 2019). For low-paid workers who are already struggling with low income, the reduced wages could push them further below the poverty line.
Since one of the main costs for many businesses is labor, one way businesses can cut costs is by employing fewer people. They might choose to lay off workers who are covered by the mandated insurance plans. This is especially likely for workers who are at or near the minimum wage. In this scenario, the cost of hiring such workers, including the cost of providing mandated insurance coverage, might be too high for the employers (Blavin & Gangopadhyaya, 2022). As a result, employers might reduce their workforce or increase the workload for existing workers by having them work more overtime to offset the cost of the mandated insurance plans.
In conclusion, requiring employer-paid insurance may result in low-paid people losing their employment permanently because it raises the cost of labor for firms. Employers may be forced by the rising labor cost to reduce their workforce or make concessions to employee benefits. Policymakers should assess how requiring employer-paid insurance would affect low-paid workers as well as the economy as a whole. Striking a balance between offering workers healthcare coverage and ensuring that employment prospects are not lost permanently is crucial.
References
Blavin, F. & Gangopadhyaya, A. (2022). How the minimum wage affects the health insurance coverage, safety net program participation, and health of low-wage workers and their families. Urban Institute. Web.
Freiberg, T. (2019). Effects of care leave and family social policy: Spotlight on the United States. American Journal of Economics and Sociology, 78(4), 1009–1037. Web.
Phelps, C. E. (2018). Health economics (6th ed.). Pearson Publishing.