The Truth About the 'Obamacare Layoffs'
Looking deeper into the job losses attributed to Obamacare, it appears that the health care act is not the looming threat it's being made out to be.
"Obama Reelection Triggers Massive Layoffs Across America."
"Job loss an early consequence of election."
"Obama keeps job; others lose theirs."
"The Obamacare Layoffs Begin..."
"Top US Companies Plan Layoffs Because of Obamacare."
These are some of the headlines coming out of media sources like the Washington Times, the National Review, and Fox News since President Obama won his bid for reelection last Tuesday night. They speak to a looming economic apocalypse and rest the blame on the shoulders of the president and his administration's business and health care policies.
Alarming? Yes. Accurate? Not so much.
Digging just a little under the surface unearths a whole lot of hyperbole and in some cases, to use an executive term, "malarky."
Take the Washington Times article "Obama keeps job; others lose theirs" that loosely claims Boeing (NYSE:BA) and Groupon (NASDAQ:GRPN), among other companies, can directly attribute layoffs to a second Obama term. Pulling only half of a quote from Boeing Defense, Space & Security President and CEO Dennis Muilenburg -- "funding for the US Department of Defense is under extreme pressure" -- the Times carefully omitted the second part of the sentence: "we're innovating and expanding our core, in the US and around the globe, to sustain and grow our business."
While there is indeed a shake-up at Boeing since the winding down of the Iraq and Afghanistan wars means less Pentagon demand for cruise missiles and drones, the company has expanded its commercial airline division -- from 80,000 jobs at the beginning of 2012 to 85,000 presently.
Moreover, the cost-cutting plans were made on November 5, and, according to spokesman Boeing Todd Blecher, were not a response to the election.
As far as Groupon is concerned, Business Insider reported that "the cuts are part of a sales and marketing 'optimization' effort that Groupon management alluded to on the last earnings call."
Consider also the foreboding National Review article "Obamacare Layoffs Begin..." that was about exactly one anonymous Las Vegas business owner who called into a radio show to complain that Obamacare already forced him to fire 22 of his 144 employees -- despite the fact that the law wouldn't go into effect until 2014.
Similarly, the Fox News (NASDAQ:NWS) article claiming "massive layoffs across America" -- merely its headline tacked onto a story published by Utah's KSL.com -- profiles a single coal company, UtahAmerican Energy Inc. of Murray Energy, that cut 102 of its miners' jobs.
It should be noted that Murray Energy CEO Robert Murray has been an outspoken critic of Obama and a supporter of Romney -- even allegedly forcing miners to take an unpaid workday to attend a campaign rally as well as coercing donations and votes for the Republican candidate.
Now, there has been much ado about the decline of Big Coal for the past several years. Increased competition from cheap natural gas coupled with rising production costs associated with replacing aging coal plants has put a squeeze on the industry. It's true that the EPA has tightened regulations on soot- and smog-forming air pollution but, largely, the market forces are simply moving against this particular fossil fuel.
Again, the UtahAmerican Energy Inc. job losses were the only ones identified in Fox's "massive layoffs" article. Meanwhile, the "related stories" side panel features links to over a dozen headlines totaling thousands of cuts from other companies. Parsing through each article, I found a variety of reasons why companies said they are delivering pink slips -- not one of them being Obamacare.
Here, in order of the Fox News article links, are the stated rationales for layoffs from rocket engine producers to PC manufacturers to wind companies. Yes, Fox News is worried about wind companies.
TurboCare and Oce's 220 jobs
TurboCare: "The move is intended to streamline the company's business and is the result of 'months of effort to assess changing energy service market conditions and how the TurboCare assets are employed...'"
Oce: "The job cuts are the result of 'careful consideration and an application of Oce's business judgment in connection with its integration with Canon.'"
ATI Schools & Colleges's 172 jobs
Though the for-profit higher education company vaguely referenced the Worker Adjustment and Retraining Notification Act of 1988 in an October 31 letter explaining its redundancies, ATI has been slapped with sanctions from the workforce commission in the past for misreporting graduate employment rates.
Rocketdyne's 100 jobs
"The money that NASA is spending on SpaceX and others who are offering lower-cost private missions is money it won't be spending on Rocketdyne...That isn't necessarily a bad thing, long-term, for Rocketdyne...SpaceX has created the groundwork for the region to become a center of private, startup space companies. They'll be employers, and if they're successful, they could make rocket scientists more than smart. They could make them rich."
CVPH Medical Center's 17 jobs
"The layoffs - nine in management and eight hourly staffers - are part of an effort to 'help bolster the hospital's financial position in 2013 and beyond..'"
FirstEnergy's 400 jobs
Regarding the immediate elimination of 142 jobs, 58 open spots, and another 200 by 2016, the FirstEnergy Corporation (NYSE:FE) "cited lower prices, competition."
Career Education Corporation's 900 jobs
The Schaumburg-based Career Education Corp.'s (NASDAQ:CECO) "said enrollment is down 22% from a year ago, and new student enrollment is down 23%."
Wright-Patterson Air Force base's 115 contract jobs
"The Air Force says the [computer modernization] program is no longer viable and it will move forward with other options to meet those requirements."
Advanced Micro Devices Inc.'s 400 jobs
"Advanced Micro (NYSE:AMD) has been suffering from the slowdown in the global PC market. We believe that the weak computer market, strong competition from Intel Corp. (NASDAQ:INTC), and the company's failure to penetrate the emerging mobile device market have forced it to refine its cost structure."
Caterpillar Inc.'s 100 jobs
According to Caterpillar (NYSE:CAT) workers, "the decision came as a response to weak demand for their forestry manufacturing equipment."
Exide Technologies' 150 jobs
"This decision was based on several factors, including the dramatic swings in the lead market and the high capital investment needed, due to regulatory requirements..."
TE Connectivity, Ltd.'s 620 jobs
TE Connectivity (NYSE:TEL) stated that the company needed "to improve operating efficiency as we see demand decline...We are consolidating into those four other plants to be more efficient."
Vestas' 3,000 jobs by the end of 2013
"One major reason for the slowdown is industry uncertainty over the production tax credit. Right now, wind producers receive a 2.2-cent tax credit for each kilowatt hour of energy the produce.That credit is set to expire December 31."
Cigna 1,300 jobs (worldwide)
A full five days before election day, Cigna (NYSE:CI) announced that "1,300 jobs will be cut worldwide now through June 2013," most of which "will occur in Europe" and this will happen "in order to deliver more cost effective and efficient health care."
Energizer's 1,500 jobs (worldwide)
A full three months before the election, Energizer (NYSE:ENR) "first announced that [it] was launching a review of its operations amid sluggish battery sales and heightened competition in the razor category." These layoffs are the result of that review.
In a separate piece, Fox News reported that Papa John's (NASDAQ:PZZA) John Schnatter has threatened his workforce with reduced hours as a result of the president's health care reform law. The CEO of the country's third largest takeout and delivery pizza chain -- and a vocal Romney booster -- said his franchise owners will likely be unable to afford to insure their employees.
However, according to Politco, Schnatter vowed instead to pass those costs onto customers -- to the tune of $.11 to $.14 per pizza.
"We're not supportive of Obamacare, like most businesses in our industry, Schnatter said. "But our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare."
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.