The U.S. economy has been creating a lot of part-time jobs lately, and not many full-time ones, you may have heard, and employees’ hours aren’t going up, either. But this economy’s employment picture just isn’t good overall, so how much is the president’s health-care law to blame for these developments?
Jed Graham of Investor’s Business Daily, who has been covering the effects of the Affordable Care Act’s mandates on working hours and employment levels assiduously for some time now, has a new contribution to the debate: a database of the number of employers who’ve announced they’re making changes because of the law — and it’s 258 employers long at launch. It’s limited to employers that have explicitly tied their decisions to the new health-care law — meaning, as Graham points out in a piece today, moves like the clothing store Forever 21’s decision to cut some employees to 29.5 hours a week (just below the threshold triggering the employer mandate) actually don’t count. More than 200 of the employers are actually public employers, because, as Graham points out, there’s both an expectation for more transparency and less potential fallout for their pointing out some of the ACA’s downsides. The list is useful in establishing causality between hours cuts and the health-care law, though as Graham notes, it’s obviously very far from complete — so the total number of employees with reduced hours (19,300) counted is, relatively speaking, insignificant. The list will obviously never be complete or an accurately representative data sample, but it can be expected to grow: The largest number of reports came in May and June — and on July 2, the Obama administration announced it was delaying the enforcement of the employer mandate for a year.
In other words, we’re probably not going to see Obamacare’s full impact on hours until next year, when employers will have to actually come into compliance with the mandate. Graham’s piece today also points out that hours — Obamacare requires employees at large firms working more than 30 hours a week to be offered “affordable” health insurance of a certain quality, and next year will begin assessing a significant penalty to firms that don’t – isn’t the only concern; there are also companies that have cut staff to avoid the mandate, which only applies to businesses with more than 50 employees, and there are firms that are cutting staff and contracting out more work to staffing firms that will take care of the coverage mandates.
But how do we get from the useful but incomplete sample above to assessing objectively what Obamacare, independent of other factors, is doing to working hours and employment? One way is to focus on labor-intensive, low-wage, low-margin industries, where we expect the mandates will have the most effect, and look at hours there. Graham, again, has done just that, and found four industries where he thinks Obamacare is clearly pushing down weekly hours: home-improvement stores, general retail stores, bakeries, and elderly services. Assuming the data are reliable, Graham probably has a point, but we’ll know better once the employer mandate’s enforcement approaches.
We can also look at national employment data for shifts in the labor market because of the health-care law, but those argument, I think, are a little more of a stretch. Chris Conover did a comprehensive analysis of the numbers so far at the Apothecary blog at Forbes. The most common data point you’ve probably heard is the ratio of part-time jobs created vs. the number of full-time jobs created — about four part-time for ever one full-time in 2013 so far; Conover compares the first six months of 2013 with other periods and finds an unprecedented slant toward new part-time jobs over this six-month period, way higher than any one-year period since 2003.
But these numbers can be highly volatile and inaccurate: Much as reporters and economic analysts make of jobs reports, the BLS’s data each month is notoriously unreliable because it relies on such a small sample of the whole labor market. Even a six-month data set is still actually pretty unreliable: Evan Soltas at Bloomberg View points out that the 4:1 part-time-to-full-time ratio seen in the first half of 2013 is hardly unprecedented, he says it’s happened 20 times since 1968. This makes it pretty hard to draw any solid conclusions yet about how Obamacare has shifted the labor market. (There’s another way to analyze how the 30-hour rule might be working, by looking at the number of workers just above and just below the threshold — here, Graham and Soltas disagree about what the data say.)
Part-time employment is definitely quite high but, of course, in an economic recovery, it’s not surprising that businesses are hiring lots of temporary and part-time employees — some suggest that we should be past that stage in the business cycle, but this is an especially weak recovery and an especially bad one for labor. It’s not clear yet how much of that can be blamed on the ACA. The San Francisco Federal Reserve bank published an analysis of the question recently, concluding that the current high levels of part-time work are still explained by the weak overall economy — but, they note, the ACA will have an effect, they just don’t think it’ll be too big.
Here’s the recent uptick in part-time employment vs. full-time employment, which is expressed in the “three or four part-time jobs have been created for every full-time job this year” factoid:
Obamacare’s mandate might mean that that continues, or at least, never goes away despite a recovering economy. Tomorrow, the BLS will release August’s payroll numbers, which might well continue the trend; if it does, plenty of commentators will cite it as evidence of the effects of the president’s health-care law. For now, we simply don’t know if it is, or, more important, if it says anything about how substantial the eventual shift will be. Anecdotal work like Graham’s is useful in that it suggests the trend, unverifiable per se, may not be stopping any time soon, and I’m inclined to think he’s right (Jim Pethokoukis weighed in on this question today, too). The San Francisco Fed suggests that the eventual shift is likely to be “small,” one to two percentage points. If they’re right, that’s 1.5 to 3 million people whose ability to get full-time work is affected, which is an interesting way to say “small.”
Even assuming it’s bigger, “part-time nation” will probably remain in the realm of hyperbole, but there is no doubt that the ACA’s mandates will mean a permanent, non-negligible shift in the way the U.S. labor market works — concentrated in certain industries and among low-wage jobs.