Subadhra Sriram's Blog

The Gap Narrows but Buyers Still Don’t Get ACA Costs

Staffing firms and buyers of staffing still don’t agree on who is going to pay for ACA costs — or how much.

As the results of Staffing Industry Analysts’ Buyer Survey indicate, buyers expect to pay $1.00 per temp hour for ACA compliance. In other words, they expect their billing rates to go up by a median of $1.00 an hour. Last year when SIA asked suppliers how much they think they bill rate would have to go up to accommodate ACA costs, it was $1.50.

It’s easy to do the math. One side says $1.00, the other $1.50. That’s a big gap to bridge.

However, there is good news: Customers have come some ways since last year. In 2013 when we asked them what percent of ACA costs they would have to pay, 62 percent said zero. Today only 34 percent share that sentiment.

They are learning — albeit slowly.  Part of this is how procurement folks see the big staffing picture. Their job is to cut costs and so far have gotten the job done by jamming it down someone else’s throat. Traditionally, staffing firms have seen themselves as not having the power to sway the buyer. So they have been picking up all costs. That’s not likely to happen with ACA.

“Suppliers are already working on a narrow margin so they are not going to be able to absorb ACA costs and survive,” says Andrew Braswell, SIA’s research analyst.

Look at it another way.  When you walk into a store and buy something, you pay the sales tax. No questions asked. You can’t get a bargain on the sales tax or refuse to pay it.  

ACA costs have to be viewed like a tax, an add-on, similar to employers paying FICA (Federal Insurance Contributions Act) costs. You don’t see procurement professionals ruminating on how to reduce those overheads.  Or schlepping them off on the IRS. The buyer just pays.

The fact is that even employers will pass on the costs to the end user. The consumer will end up paying more for different products and services. Only time will tell how exactly this will come to pass.

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