Monday, October 22, 2012

More Part-Time Workers, Fewer Hours

The unintended, but not unpredictable, consequences of Obamacare.
Obamacare has faded as a campaign issue, perhaps because it doesn't suit either the president or Mitt Romney. It's not popular, a minus for Barack Obama. Its resemblance to Romney's Massachusetts program is a minus for him. But Obamacare's relentless march to full-fledged introduction in 2014 demonstrates that, for all its good intentions, it will make the health care system more confusing (see above), costly and contentious. It won't control health spending -- the system's main problem -- and will weaken job creation.

Consider the treatment of full-time and part-time workers as an object lesson.

Exempting part-time workers is a concession to practicality. If companies had to provide insurance for all part-time and seasonal workers -- often unskilled and poorly paid -- the high costs (a worker-only insurance policy can run more than $5,000) would eliminate many jobs or inspire mass evasion. On the other hand, exempting too many "part-time" and "seasonal" workers would make achieving near-universal insurance coverage much harder.

So there's a balancing act: preserving jobs versus providing insurance. The problem isn't small. In September, 34 million workers, about a quarter of total workers, were part-time, reports the Bureau of Labor Statistics (BLS). But the BLS defines part-time as less than 35 hours a week; Obamacare's 30 hours a week was presumably adopted to expand insurance coverage. There are now 10 million workers averaging between 30 and 34 hours a week. To the BLS, they are part-time; under Obamacare, they're full-time.

Employers have a huge incentive to hold workers under the 30-hour weekly threshold. The requirement to provide insurance above that acts as a steep employment tax. Companies will try to minimize the tax. The most vulnerable workers are the poorest and least skilled who can be most easily replaced and for whom insurance costs loom largest. Indeed, the adjustment has already started.


Post a Comment

Subscribe to Post Comments [Atom]

Links to this post:

Create a Link

<< Home