Obamacare Isn’t a Job-Killer, But It’s an Excuse to Kill Jobs
August 27, 2013 Leave a comment
Back in July, Wonkblog ran a piece entitled “Obamacare Not a Job-Killer, We Have a Graph to Prove It.” From the piece:
For months now, the White House has been vexed by news reports of employers reducing workers’ hourly work week to dodge the health law requirement to provide coverage to all full-time employees (a provision that the administration has since delayed until 2015).
The White House contends that these reports are noise: When you look at the work weeks in the restaurant industry, and a number of other sectors, the average hourly work week has inched upwards since the Affordable Care Act passed.
This isn’t to say that the Affordable Care Act is causing restaurants to increase their hours; there wouldn’t be much of a reason for that. Instead, this graph makes the case that we haven’t seen widespread cutting of worker hours at restaurants in anticipation of the Affordable Care Act.
This chart also doesn’t predict the future: It’s possible that, come 2015, employers could scale back hours when the employer mandate hits. But at this point, restaurants aren’t taking widespread steps in that direction.
OK, so we won’t know for sure until 2015 rolls around and there are a shitload of other factors at work here, but as NBC Nightly News pointed out in this risible segment from a few weeks ago, the “Obamacare Part-Time Jobs Effect” (h/t Zero Hedge) is real enough for some business owners.
Jimmy Dore did a hilarious segment on the NBC report, but as with most good comedy there’s a serious issue at the core of it. Business owners just don’t want to provide healthcare to their employees…so much so that they’re willing to cut their hours to avoid the ACA’s penalties.
This is a double whammy for workers, because now, not only do they not have healthcare…they’re working fewer hours and taking home less money.
The economically-minded (like Zero Hedge) would say, “Yeah, duh…people respond to incentives.” Still, just because this outcome is relatively predictable doesn’t make it right. In fact, as The Economist hinted, it may be yet another good argument for a single-payer system.
Opinions are furiously divided as to whether the unintended harm caused by health reform will outweigh its benefits. Republicans, who have always hated the whole package, howl that it will destroy jobs. Nonsense, say Democrats; it will promote growth and boost employment. Since the law has so many moving parts, it is hard to predict who is right. But there is a risk that a lot of workers will be hurt.
American health insurance and employment are uniquely entangled. During the second world war, firms began using health insurance to woo scarce workers. Some 57% of employers now offer it, covering nearly 150m people. Company-provided insurance is not taxed, and workers like it because the alternative is abysmal. On the individual market, insurers charge the sick exorbitant rates.
This arrangement has had strange effects on the labour market. Workers stay in bad jobs for fear of losing insurance. As the cost of insurance rises, employers lower wages. Health costs seem to depress hiring, too. A study found that from 1987 to 2005, industries that offered health insurance saw jobs grow more slowly than those that did not. No such pattern was seen in those industries in Canada, where people receive health insurance from the government.
However economically rational or morally bankrupt you think the “Obamacare Part-Time Jobs Effect” is, it is a choice employers are making. Reuters reported today that Starbucks is continuing its tradition of trying to present itself as a corporation that “does the right thing”
Starbucks Coffee Co will not follow the lead of other companies that are cutting health insurance benefits or reducing hours for employees in anticipation of the U.S. Affordable Care Act, the coffee shop chain’s CEO Howard Schultz told Reuters on Monday.
“Other companies have announced that they won’t provide coverage for spouses; others are lobbying for the cut-off to be at 40 hours. But Starbucks will continue maintaining benefits for partners and won’t use the new law as excuse to cut benefits or lower benefits for its workers,” Schultz said in a telephone interview.
Too bad there aren’t more companies like Starbucks out there. My prediction is that, come 2015, a lot more employers are going to use Obamacare as another post-Great Recession excuse to “turn good jobs into bad ones” (h/t TomDispatch)…or just kill them altogether.