Obamacare: Implications on young adults and businesses

Brendan is a 23 year old, recent college graduate who is currently unemployed. Brendan finished studying film at Rhodes College in the spring where liked playing intramural sports, going out on weekends and other activities that many typical college students like to do. As Brendan now decides his next step in life, he faces a common problem for recent college grads: the job market.

Beginning on January 1st, the Affordable Care Act will allow Brendan and other young adults up to age 26 to stay on their parent’s healthcare plans. The ACA, also known as Obamacare, will let young adults receive the benefit of affordable health care from their parent’s plans even if they are out of school, employed, or financially independent of their parents.

Traditionally, young adults have needed to enter the full-time workforce immediately after graduation to become eligible for their employers group sponsored healthcare coverage. With employer sponsored healthcare no longer an incentive for young adults to find immediate employment, many will choose to delay their job search and the high demand for entry level jobs will fall.

Now that Brendan will continue to be covered under his parents health plan, he does not need to immediately find a job and can now sit back and wait for his dream job to emerge.

Although Brendan and many other young adults his age may be happy that they can relax and not feel pressured to find immediate employment, many businesses will be negatively impacted. Since fewer qualified young adults will be applying for entry level jobs, companies will have fewer applicants to choose from. A smaller pool of total applicants means that companies, for the most part, will be likely to have fewer qualified applicants to fill their job openings. Overall, the number of new entry-level workers joining the work force will decline.

Despite the claims that the U.S. already has too many people applying for entry level jobs, the website, People Matters reported that currently, 66 percent of employers believe that there are not enough quality candidates applying for entry level jobs. Employers will soon find themselves with even fewer quality candidates starting on January 1st, when many young adults up to 26 years old will lose one of their major incentives to work. Fewer qualified candidates will negatively affect businesses hiring entry level workers.

High caliber entry level workers are critical to a business’s competitiveness because they increase productivity and establish internal talent. High worker productivity allows businesses to save time and money. The faster workers can produce, the faster the company can meet its production goals. Many businesses also like to establish internal talent pipelines and career tracks so their business can be run more effectively. Unfortunately companies’ abilities to do all of this will be hindered with fewer high caliber entry level workers.

So what does this new change in the Affordable Care Act mean for us? At the end of the day, adults up to age 26 will enjoy the opportunity to relax under Obamacare, but their loss of incentive for immediate employment will consequently hurt business.