ObamaCare Wields Big Impact On Low-Wage Workers' Hours

Investor's Business Daily

Suddenly, a new consensus has emerged among economics pundits that ObamaCare's impact on the workweek is benign.

That view reverses the consensus earlier in the year, when soaring part-time jobs and a dearth of full-time hiring were blamed on the health care reform.

But the focus on full-time vs. part-time jobs misses ObamaCare's fallout on low-wage workers.

The September jobs report released Tuesday showed that the ranks of full-time workers surged by 691,000 as part-time workers plunged by 594,000.

While the employment data showed a disappointing loss of hiring momentum overall, the White House touted the big swing toward full-time jobs as disproving the charge that ObamaCare is causing an increase in part-time work.

Conservative American Enterprise Institute pundits said much the same thing. Surely both couldn't be wrong, could they

Actually, they could, and for a very simple reason: they are examining the wrong data.

$14.50 Or Less

Almost all of the analysis of ObamaCare's impact on the workweek and part-time jobs has focused — erroneously — on workforce-wide data. To answer the question of whether ObamaCare is having a negative impact on work hours, one has to focus on what is happening in industries where wages are low and the ranks of the uninsured tend to be high.

Such industries, with tight profit margins and limited pricing power, have little wherewithal to take on substantial new costs and are most likely to cut work schedules to just below the 30-hours-per-week threshold at which ObamaCare employer penalties hit.

IBD has been doing such an analysis and continues to find that something is seriously depressing the hours worked by modest-wage earners.

A closer look at the industry hours worked reveals two distinct job markets. Private industries where pay for nonsupervisors averages up to about $14.50 an hour employ 29 million workers (roughly the bottom quartile). In these industries, the workweek is back near the 27.4-hour record low seen at the depth of the recession in 2009.

Meanwhile, the average workweek for the 85 million jobs that comprise the rest of the private sector is 36.9 hours — an hour longer than it was in mid-2009 and slightly higher even than it was before the recession.

While it's impossible to say for sure whether the low-wage workweek would have been flat, down or up over the past year and a half in the absence of the employer mandate, the evidence points to a meaningful impact on hours worked from ObamaCare.

Hours worked have turned down in a wide range of industries, including grocery stores, department stores, lodging and services for the elderly and disabled. Also, anecdotes about work-hour cuts to avoid ObamaCare costs in these very industries provide at least a partial explanation for their shorter workweek.

Half-Baked Jobs

The workweek at retail bakeries plunged from 29.7 hours in November 2012 to 27 hours now. While not representative of the broader trend, the stunning drop has no explanation other than ObamaCare.

The workweek in these low-paying industries perked up slightly to 27.5 hours in August, the latest data available that are broken down by industry subgroup. It's possible that the improvement is connected to the July 2 announcement that employer penalties will be delayed to 2015. However, September data show a decline in the workweek in the leisure and hospitality and retail sectors, suggesting much of August's gain will be reversed.

Even still, aggregate hours worked in these industries have grown only 60% as fast as job growth this year through August. In other words, the shorter workweek is responsible for about 180,000 of the 440,000 job gains in these industries in 2013.

IBD has a running list that now includes 351 employers that have opted to cut work hours below 30 per week or take related steps to limit liability under ObamaCare's employer mandate. Each entry is documented with links to news sources and public records.

About 275 entries on IBD's list come from the public sector, including more than 100 school districts. BLS doesn't track hours in the public sector so the cuts don't show up in industry workweek data.

While economics pundits now doubt that ObamaCare is leading to shorter work schedules, the public has no such doubts.

A recent IBD/TIPP poll found that 8% of respondents had a family member who had work hours cut due to ObamaCare. A Democracy Corps poll last week found that 84% were concerned that employers would cut work hours to avoid paying for insurance.

Still, the old consensus that America was rapidly shifting to a part-time society was also flawed. Those who had argued that nearly all jobs created in 2013 were part-time had relied on an unreliable point of comparison — after full-time jobs grew 1.4 million and part-time jobs fell by 400,000 in the last five months of 2012.

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