Sunday, November 18, 2012

New Healthcare Law: Higher Employee Turnover And Reduced Company Stock Returns?

One aspect of the new healthcare law (The Patient Protection and Affordable Care Act (PPACA)), and commonly called Obamacare, is the requirement that employers with more than 50 employees must provide healthcare to those employees working more than 30 hours per week. A number of companies, especially in the retail and fast food industries, have stated they will reduce employee hours to below 30 hours per week in order not to be required to provide healthcare to the employee as required under the new law. A potential consequence is companies might see higher levels of employee turnover.

As the below chart shows, companies that do have higher turnover rates tend to have lower equity returns. Investors will want to monitor a company's employee turnover in the event higher turnover rates do begin to negatively impact company profitability and hence the company's stock performance.

From The Blog of HORAN Capital Advisors


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