Obamacare and part-time employment

It’s difficult to crank out economic analysis while live-blogging an event. So during yesterday’s Sebelius hearing, when Democrats argued that Obamacare isn’t inducing employers to push employee hours below 30 per-week, so as to avoid paying for health insurance, I simply reported the argument and said that “some fact-checking is in order.”

The argument seemed fishy. House Democrats were saying that in recent years, part-time employment has declined as a percentage of all employment. But this is the period that followed the depth of the 2008 recession. One would expect much more employment, and much more full-time compared to part-time employment, during such a period. Thus, Obamacare could easily be depressing full-time employment, even as full-time employment has increased as a percentage of all employment.

This is what Robert Samuelson believes has happened:

In previous business cycles, part-time work jumped sharply during the recession as companies reduced production, but then fell rapidly during the recovery. The rapid decline hasn’t happened this time. Cautiousness by employers may be one reason; fears of the ACA mandate may be another.

Meanwhile, the administration delayed the employer mandate from 2014 to 2015. This relieves the immediate pressure on businesses to cut hours. It delays Obamacare’s adverse job effects.

Samuelson cites a study by the San Francisco Federal Reserve. It found that the likely increase in part-time employment caused by Obamacare is likely to be “on the order of 1 or 2 percentage points or less.” Although this sounds small, Samuelson notes that it translates to 1.4 to 2.8 million part-time jobs.

Samuelson concludes:

The ACA’s hiring disincentives are one factor among many (greater risk aversion, sluggish consumer spending, deadlock in Washington) deterring job creation. The effect is probably less than the ACA’s most rabid opponents assert but more than the law’s uncritical apologists assume. It may grow with time.


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