Guest Post: Low-Wage Hours At New Low As Obamacare Fines Loom
Submitted by Jed Graham via Investor's Business Daily,
Low-wage workers clocked the shortest workweek on record in December - even shorter than at the depth of the recession, new Labor Department data showed Friday.
The figures underscore concerns about the ObamaCare employer insurance mandate's impact on the work hours and incomes of low-wage earners.
It's impossible to know how much of the drop relates to ObamaCare, but a strong connection is possible. The workweek has been getting shorter in many of the same industries where anecdotes have piled up about employers cutting hours to evade the law's penalties.
While weather likely played some role in December, that's not the driving factor. The low-wage workweek in November had already matched the prior record low — set in July 2013, just as the Obama administration delayed the employer mandate until 2015.
Further, January's data not yet broken down by industry subgroup show that rank-and-file retail workers saw another big fall in average work hours, matching a record-low 29.7 hours a week.
In December, office supply chain Staples cut the schedules of part-time workers to a maximum of 25 hours per week, below the 30-hour threshold at which the Affordable Care Act's employer mandate kicks in.
In November, David's Bridal reportedly cut even full-time salespeople and stylists below the 30-hour mark.
ObamaCare's penalties won't apply until 2015, but they will reflect 2014 staffing levels, giving employers little time to adjust.
More Jobs, Fewer Hours
IBD's gauge of the low-wage workweek, now at 27.4 hours, includes the 30 million nonmanagers working in private industries where pay averages up to $14.50 an hour.
These industries boosted payrolls by 700,000 (nonsupervisors) in 2013, or 2.4%, but hours worked grew at half that rate. In effect, shorter hours would have explained 323,000, or 47%, of those new jobs.
Again, weather wasn't the primary factor. Even if the workweek had held steady in December, the workweek would have been responsible for one-third of the jobs added in low-wage private industries last year.
That's not to say that overall job creation is weaker than it appears. That's because the workweek has moved higher for non-low-wage workers. This group, including managers and those in higher-paying industries, is now clocking a longer week than prior to the recession.
Finding The Problem
That divergence explains why many economists and nonpartisan arbiters like the Congressional Budget Office have concluded that ObamaCare has had no impact on part-time employment. The effect doesn't show up in aggregate workforce data, but that is the wrong place to look.
The private employers for whom ObamaCare's mandate is a concern are those with a primarily low-wage workforce.
Incoming ObamaCare enrollment data show that three-fourths of subsidies are going to modest earners making less than 250% of the poverty level, or $29,175 for a single person.
Businesses will face a nondeductible fine of $3,000 for each worker who receives a subsidy to buy insurance via the new exchanges. (For retailers facing a 39.2% federal and state tax rate, the fine would equal $4,930 in deductible wages.)
For employers in industries with low profit margins and modest-skill jobs, ObamaCare's costs clearly provide an incentive to cut work hours. Companies do, however, have to weigh the potential downside of shorter workweeks — lower morale and worse customer service.
Anecdotal evidence suggests that low-wage employers may be pushing full-time workers to clock more hours, even as they are limiting the size of their full-time workforce.
Still, the workweek got shorter across a broad range of low-wage industries in 2013. Average weekly hours fell 1% at supermarkets, 2% at clothing stores, 2.4% at limited-service restaurants, 3.2% among providers of home care services to the elderly and disabled, 4.2% at general merchandise stores, 7.2% at retail bakeries and 7.7% at home centers.
The data suggest that lawmakers should consider if the big minimum-wage hike on the president's agenda is compatible with ObamaCare's employer mandate. The combination would hike low-wage labor costs by up to 70% and could further encourage a part-time shift and complicate the goal of reducing inequality.
Of course, as Paul Krugman told Stephen Colbert....
"I'm ok with a little bit of wealth redstribution from people who have been lucky to people who are unlucky."
Seems to sum up a lot of perspectives nowadays "lucky" taxpayers helping "unlucky" others (like "unlucky" bets on real estate derivatives, "unlucky" bets on leveraged Russian bond arbs, "unlucky" Detroit pension fund holders...)
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