A change of hiring practices ?

I am putting this in the gray area because it states it is tolerant of hypothetical thought... this thread is hypothetical inspired by some small business forums. Therefore, I have no sources, no proof. Only a thought. So:


I have been reading some small business blogs lately, and as you may imagine, the owners of many small businesses are concerned about mandates on them to purchase health insurance for their employees, or be fined. The general tone was that financial resources are already stretched to the max, and any new expense would make fighting the good fight that much more of a struggle.

(just a note) Most were aware that there was a minimum employee head count for an employer to be obligated to purchase health care, however were concerned that this too may one day change.

I also lurk around another community forum for small business owners. Reading through some of the posts, no one said it directly, however the tone was set, it seems that some business owners are considering taking their employees off of the pay roll, and moving them to an 'under the table' status. We all know that this is HIGHLY illegal, however it happens. Now keep in mind, I am not talking about your accountant's office, or your child's day care facility, this was more of your local store owner and small to medium construction types. However, the tone of some of the threads seemed as though the OP's saw the new health care bill's mandate as an incentive to do just that, thus, knocking out the obligation of purchasing health care, and pay roll taxes.


My questions come from a different point of view I guess... while understanding the choice to have illegitimate employees is illegal, we all know that it happens already. Now, with some business owners feeling the HC mandate incentivizes the employer to have his/her employees work under the table:

Since small businesses are the "economic engine for the nation", if they were to cut legitimate productivity so that the taxed quarterly income would reflect their downsizing of employees so that it would not appear suspicious the the fine people of the IRS,

- would it actually slow the flow of tax revenue enough to compound the current financial crisis?

- Aside from the obvious legal repercussions to all parties if caught, what would keep the 'under the table' workers from working with the "employer", and also collecting unemployment, collect other assistance from other government programs in an already over stretched system? Would this possibly be the end of the entitlement system as we know it?

- Would this place the employee in a position of authority over the employer? Should the employee feel they are being treated unfairly or not being paid enough, or is just flat out disgruntled, what would keep them from threatening to report the employer should their demands not be met?

I am aware that these things already happen, however, not on a grand as scale as I am hypothetically proposing.