As medical technology companies have pressed to permanently repeal Obamacare’s medical device tax, proponents of repeal have argued that getting rid of the tax will prompt job growth. Here is a sampling of major medical technology companies hiring patterns
Johnson & Johnson
One of the world’s best-known brands, Johnson & Johnson has several divisions—the 60,000-employee medical-devices segment making up almost half of the company’s total headcount. When they announced—less than a month after the medical-device tax was suspended—that they would eliminate 3000 medical-device jobs worldwide, the company said it would save up to $1 billion as a result.
Its latest annual report did not mention new, domestic hiring as a result of the tax windfall, but instead said Johnson & Johnson is “seeking expansion opportunities in large, growing markets.”
Johnson & Johnson’s total headcount fell in the first year of its restructuring by 700 people. It’s not known how many of its U.S. layoffs were offset by expansion in other markets, but the report says that, “approximately 1500 positions have been eliminated,” suggesting another 1500 layoffs to come before this restructuring wraps up next year.
Like Stryker and Johnson & Johnson, Medtronic has a seat on the board of AdvaMed, which has endorsed the House AHCA. Like Stryker, Medtronic has also been lobbying for its passage— on its own and with the help of two lobbying firms.
Asked about the medical-device tax in 2015, Medtronic CEO Omar Ishrak told Fox Business News, “It’s well over $200 million in terms of yearly costs we have to pay out. That money we could have used for R&D or other purposes…We’d welcome its repeal, but you know that’s really not up to us.”
This is not Medtronic’s first time in a debate over taxes and jobs. In a 2014 mega-merger, Medtronic acquired Covidien and did a tax inversion—enabling it to avoid U.S. taxes on international profits—switching its legal home to Ireland. Ishrak told Fox Business News, “We’ll have more consolidation in manufacturing and so on. This is a process of cost reduction and optimization of back offices that can go on for several years and provide us with good earnings leverage.”
Image Credit: The New York Times