Despite Obamacare, execs still expect to keep hiring
(MoneyWatch) Although chief financial officers routinely express concern about the impact of the Affordable Care Act on their companies, they also expect hiring conditions to improve over the next 12 months, a new survey shows.
Despite concerns over the expected impact of Obamacare when it take effect next year, the executives said they expect to increase the number of full-time employees hired by their companies by 1.8 percent, according to a new Duke University/CFO Magazine poll of CFOs at 530 U.S. companies.
"The expected two percent growth in employment is solid, given the context of long-run shifts away from full-time employees largely because of concerns about health care reform and economic uncertainty," John Graham, Duke Fuqua School of Business finance professor and director of the survey, said in a statement.
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Estimates vary regarding the impact of the new healthcare law on hiring and on the country's unemployment rate. Critics of the ACA claim that the mandate on employers to provide health benefits will discourage companies from adding staff. Proponents of the law dispute this, arguing that extending health insurance to more Americans will benefit the economy.
More than 9 out of 10 businesses subject to the law already offer health coverage, while companies with fewer than 50 employees are exempt (About 60 percent of these smaller firms offer health insurance, and under the ACA they also may qualify for a tax credit for offering coverage.) Of the 28 million small businesses in the U.S., 96 percent won't be subject to the rules, according to the U.S. Small Business Administration.
Still, some companies already appear to have taken evasive action before the the new health care rules take effect. Nearly 60 percent of those surveyed say they have increased the number of part-time and contract workers they are using. Of this number, more than a third attribute this shift to the ACA. Another 44 percent say they are hiring temporary workers in response to extreme economic uncertainty.
The companies in the CFO/Duke survey also expect to raise wages by 2.3 percent over the next 12 months, a slightly faster rate of growth than government forecasts. At the same time, the 530 executives expect earnings at their companies to increase by about 13 percent.
"Even with numerous risks and uncertainties affecting the global economy, U.S. firms have been able to protect the bottom line, operating at near-record profit levels," said Graham. "By year-end 2014, U.S. firms expect return on assets to jump above 10 percent for the first time since 2007."
Beyond the uncertainty of the ACA, another risk CFOs cite is more turbulence in the markets. More than 40 percent say they believe the stock market is overvalued and that it will experience a downward correction. Another problem they see coming is the impact of rising interest rates.
In spite of these concerns the companies are willing to spend to improve their infrastructure. The executives expect to increase spending on capital improvements by 4.8 percent in the coming year.
