House Speaker John Boehner, among other Republicans, wrongly tweeted that a recent “study” found “74% of small businesses will fire workers, cut hours under #Obamacare.” Actually, no more than 13 percent of the small businesses surveyed said that.
On July 16, the U.S. Chamber of Commerce released a three-page report summarizing the results of its Small Business Outlook Study for the second quarter of 2013. The report said: “Despite the Administration’s delay of the employer mandate by a year, small businesses expect the requirement to negatively impact their employees. 27% say they will cut hours to reduce full time employees, 24% will reduce hiring, and 23% plan to replace full time employees (30 hours per week or more) with part-time workers to avoid triggering the mandate.”
The Washington Examiner published an article about the survey’s findings under the inaccurate headline: “74% of small businesses will fire workers, cut hours under Obamacare.” That article got the attention of Boehner, other Republicans and their allies, who then repeated the bogus claim to their many followers on Twitter.
Speaker John Boehner tweet, July 17: Study: “74% of small businesses will fire workers, cut hours under #Obamacare” http://bit.ly/12GmjgF cc @dcexaminer @uschamber
NRCC tweet, July 17: Poll: 74% of small businesses will fire workers, cut hours under #ObamaCare. bit.ly/16JGKag #House2014
RNC tweet, July 17: ObamaCare’s TRIPLE THREAT for 74% of small businesses: fire workers, reduce hiring & switch to part-time workers. bit.ly/1dCTLWR
Rep. Martha Roby tweet, July 17: “74% of small businesses will fire workers, cut hours under Obamacare” – Washington Examiner #ObamacareHeadlines washingtonexaminer.com/74-of-small-bu…
Rep. Steve Stockman tweet, July 17: More proof #Obamacare is bad for workers. 74% of small biz say they’ll be forced to cut jobs, hours goo.gl/TFBwx #tcot
Rep. Louie Gohmert tweet, July 17: More evidence #Obamacare is bad for businesses & employers. 74% of small biz plan to make workforce reductions. goo.gl/TFBwx
American Future Fund tweet, July 17: FACT: 74% of #smallbiz are preparing for #ObamaCare by firing workers! bit.ly/15H2STu
But the survey didn’t find that “74% of small businesses will fire workers, cut hours under #Obamacare.”
When FactCheck.org inquired about the survey results, a Chamber of Commerce spokeswoman told us that the percentages included in its report were based only on the responses of those businesses “impacted by the employer mandate.” And most respondents said they wouldn’t be affected by the mandate.
The health care law requires employers with 50 or more full-time workers to offer health insurance to their employees or pay a penalty. But the Chamber didn’t limit its survey to only businesses with 50 or more full-time employees. Instead, small-business executives were defined as those in an “executive level position in a company with fewer than 500 employees and annual revenue less than $25 [million],” the report said. And only “17 percent of the small-business owners surveyed responded they would be impacted by the employer mandate,” the Chamber spokeswoman told us.
The Chamber, which opposes the law and supports its repeal, declined to provide us with a copy of the survey, but it did give us the wording for the question:
Chamber survey: As a result of the health care law, the employer mandate will require employers with more than 50 full-time workers to offer health coverage to all full-time employees and their dependents or face a penalty. The law defines a full-time employee as someone who works 30 hours per week and the penalty is based on the number of full-time employees. Will you be impacted by the employer mandate?
If answered yes:
Please indicate how your business will react to this new mandate. Please select all that apply.
a. Reduce hiring to avoid surpassing the 50 full-time equivalent employees
b. Cut back hours to reduce the number of full-time employees
c. Stop providing employee health insurance
d. Replace full-time employees with part-time workers
e. None of the above
As we explained earlier, 17 percent of those surveyed answered “yes.” Furthermore, as the question makes clear, small businesses that answered “yes” could select all of the choices that applied to them. So, it would be wrong to add up the percentages for all of the responses — as was done to get 74 percent — since there could be overlap that would lead to double counting.
Even assuming that one could add the percentages together, that would mean, at most, 13 percent of the small businesses who responded to the survey would cut hours, reduce hiring or replace full-time employees with part-time employees.
The 74 percent figure isn’t mentioned anywhere in the Chamber’s report summarizing the findings of the survey. However, the Chamber’s senior vice president and national political director, Rob Engstrom, did refer to the figure when he tweeted on July 17: “@Bill__Oreilly thanks for including our #smallbiz survey on the segment tonight. 74% will fire or reduce hours bc of employer mandate.”
These tweets distort what the survey actually said, but it’s true some jobs will be lost because of the law’s employer mandate.
The nonpartisan Congressional Budget Office said that the employer requirements “will probably cause some employers to respond by hiring fewer low-wage workers” and perhaps hire more part-time or seasonal employees. The CBO said penalties assessed to employers “will, over time, generally be passed on to workers through reductions in wages or other forms of compensation.” It didn’t give an estimate for jobs lost.
As we said when we looked at this issue in 2011, an analysis by The Lewin Group, an independent subsidiary of UnitedHealth Group, estimated that 150,000 to 300,000 low-wage jobs would be lost. Other positions would be added in sectors such as health care and insurance, with the overall impact being a small net loss in jobs.
About the Survey
The Small Business Outlook Study was conducted online June 21 to July 8 by Harris Interactive. The “national sample” of 1,304 small-business executives was made up of 499 Chamber members and 805 non-Chamber members that were “weighted to be representative of the small business population,” according to the methodology cited by the Chamber.
The Chamber said the survey had a margin of error of plus or minus 2.5 percentage points. However, Harris Interactive, in a statement to FactCheck.org, said it mistakenly included the margin of error, which couldn’t be calculated because the survey was an opt-in survey. That is, the respondents volunteered to participate and were not selected at random. Despite that fact, Harris said that it “stands by the veracity” of the survey. See the full statement below:
Harris Interactive, July 25: Harris Interactive mistakenly included a sampling of the margin of error in the methodology of the survey, and regrets the error. Respondents for the U.S. Chamber Small Business Survey conducted by Harris Interactive were selected from two lists –one of qualified small business owners and one of U.S. Chamber small business members. The data has been weighted to reflect the composition of the small business owners in the United States. Because the sample is based on those who agreed to participate, no estimates of theoretical sampling error can be calculated. Harris Interactive stands by the veracity of the data for the U.S. Chamber’s Quarterly Small Business Survey.
– Justin Cohen, with D’Angelo Gore