That's a sort of Ricardian equivalence story you're painting which generally doesn't happen in reality.

It happens constantly, everywhere. People respond to new incentives and constraints by changing their behavior. Employers are not exempt from this basic human trait.

When my costs change, my spending behavior changes. Just recently I discontinued one service I subscribe to that had gotten too expensive (home telephone), switched a second service to a different provider (cable TV/internet), and changed to a cheaper service level on a third (mobile phone). These savings are significant, but won't really make any appreciable difference in my lifestyle. If my income were lower I would be even more sensitive to changes in my costs.

Several years ago I was the co-owner of a small business. It was my signature on our employees' paychecks. We offered a generous wage and had no problem attracting employees, even with offering essentially no benefits. We employed few enough people that we'd probably be exempt from most regulations and mandates, but if we were not then any new required benefit definitely would have affected our pay scale. We simply would not have been able to afford to continue to offer the same wage as well as an expensive new benefit. Well, rather, we could have afforded it by dipping into our own pockets to pay it, but that would not have been the highest-probability outcome.

On the other end of the spectrum, I currently work for a fairly large employer. We have a negotiated contract, with exceedingly generous benefits. In response to recent major U.S. legislation, we have lately been required to start paying a portion of the cost of an important benefit that used to be entirely employer-paid. This is functionally identical to a pay cut. The percentages in our negotiated annual pay increase schedule have also been reduced in the latest contract. Wages are sticky, but there are common, obvious workarounds.

What if we're in an environment where wages are already stagnant - you think workers are going to accept a pay cut to compensate to the new benefit? Fat chance, wages are called "sticky" for a reason.

Sure, that's why I pointed that out. If wages are already stagnant, then they will remain so longer than they otherwise would have, or the increase in unemployment will be worse; probably both. Direct salary is unlikely to fall for current employees (at least those who remain employed after the mandate), but there will be downward pressure on their total compensation until it is back in equilibrium. New hires will face lower salaries, though. And some who would have been new hires will not be offered a job at all.

The world is not static. People change their behavior in response to incentives.

I mean otherwise you would say that no government policy could impact the profits of corporations, as they'd just rearrange the costs and prices of their inputs and outputs to maintain a target profit level. This is obviously not true in general.

I think actually this is true in general, at least for businesses that are not on the margin, and for policies that only affect input prices.

Government regulation, at least in this sphere, is functionally indistinguishable from natural disaster. Harsh winter in Florida, orange prices go up. Dairy Price Support Program passes, Domino's uses a little less cheese on their pizzas. Some misguided labor regulation is put in place, compensation is re-arranged, and fewer people are employed.

Marginal businesses - those which their owners now consider just worth keeping open - will find the cost of re-organizing to comply with the mandate pushes them across the line to unprofitability, and close, sending their profit level to 0 (along with the salaries of their employees). Other businesses will bear these re-org costs, some of them being pushed, in their turn, to the margin, but the far greater moiety of ongoing burden will fall on employees.