Mike Shedlock takes me to task for our discussion on ACA/Part time Jobs: Did Obamacare Cause an Increase in Part-Time Employment?  which led to this response Measuring What Didn’t Happen: Did Obamacare Cause an Increase in Part-Time Jobs? No Says Ritholtz, and Reuters; Yes, Says Mish.

I was pushing back against the “ACA caused all of the part time work” meme, and did not put a lot of thought or care into the work. I plead guilty to overgeneralizing and imprecision in my answers — two errors I hope to clarify with this post. At the same time, I will throw the same charge back at Mish, noting he too over-generalized, as well as made several statements that are unsupported by data, and are at best mere guesses presented as facts.

First my Mea Culpa:

Yeah, I was sloppy in my response to the emailer, posting the EPI chart and mostly leaving it at that. I thought the timeline was self explanatory in terms of the broadest accusations  made.

What I should have written more precisely was this:

“The claims that Obama Care caused all or nearly of the huge increase in part time work is utterly belied by the timeline. The surge in part time employment began a full 3 years before ACA became the law, and 5 years before the SCOTUS said it was legit. The huge increase in part time work, beginning some time in 2007, was coincidental with the worst recession since the Great Depression and a spike in unemployment to over 11%. This was on top of the collapse in Home Construction employment circa 2006. As such, it is hard to imagine that all of the blame being heaped upon ACA is accurate.”

That response is accurate — the spike in Part Time work happened before Obama was even the nominee for president.

But there is another level of analysis, one that I failed to discuss, and that Mish simply got wrong, and it is this: We really don’t know what the actual impact of ACA/Obamacare is in the real world with any degree of accuracy. There simply isn’t enough reliable data to draw any firm supportable conclusions.

We can surmise, hypothesize, assume, guess, and make estimates. We can argue, debate, persuade, engage in all manner of rhetorical flourishes.We can share anecdotes, tell personal stories, construct narratives.

What we cannot do is know with any degree of accuracy what the actual impact in the real world is. I have a suspicion the ACA has had less impact than many people have claimed. We know that it does not apply to companies that have less than 50 employees. We also know it has little impact on companies with much more than 50 employees, as they are locked into ACA regardless. Sure welfare queens like Wal-Mart (medicaid, foodstamps, welfare)  and McDonalds may have been cutting hours back — but that’s been their standard operating procedure for decades. McDonalds actually counsels even full time employees how to get welfare and public assistance.

Did some CEO/CFOs say it did? Yes, they did, but lets be blunt — these are the same corporate psychopaths who claim that unexpected bad weather in Winter impacts retail sales. Really, whoever could have ever foreseen snow in Minnesota in February!  Any investor knows never to rely on what a CEO says, as they are professional prevaricators as a group — they would blame their mothers for a miss if the analysts were dumb enough to buy it (and many are).

Consider the distribution curve of companies that might be affected by the law: The fat part of the curve would likely be those firms near 50 employees — anywhere from 40-60 — who might be adjusting their payrolls to stay under that 50 people bogey. And firms just over it could shed people to get out from under the ACA requirements. If anyone has an accurate way to quantify that, I’d like to see it; even some basis for an intelligent a guess would be superior to most of what passes for analysis on this subject.

But that is a tiny part of the dispersion of company sizes. As the Census data shows, of 27,281,452 firms employing some 120,903,551 people. Of this list, there are 526,307 firms that have 20 to 99 employees, and employ 20,684,691 workers. I’d like to see their data as well.

My own personal anecdote: I work with a small band of pirates in my own firm, which has no obligation to provide health care, as we are way, way under 50 people. But we do so because 1) We want to recruit and attract the best talent; 2) We are in a competitive marketplace; 3) We are like a family and want to take care of our own.

I cannot imagine those three reasons are unique to our firm. So even companies in the 40-60 “zone” may or may not see an impact relative to ACA mandates.

~~~

We all are occasionally guilty of imprecision, faulty arguments, bad assumptions.

I see nothing in Mish’s analysis that proves that ACA has had an impact. We simply do not know what the impact is yet.

Category: Data Analysis, Employment, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

31 Responses to “Diving Deeper into the Nexus Between Part Time Jobs & ACA”

  1. catman says:

    ACA and part time jobs? Sounds like mistaking c for c. Let’s give it until the next presidential campaign and see where we are.

  2. Frilton Miedman says:

    The greatest tragedy of this “debate” is the misdirection of the REAL cause for increased P/T labor .

    Mish is a quack, a moron, I can’t read his garbage because it’s almost always a formulation of opinion backed with cherry-picked data to “prove” his case, instead of data used to formulate an opinion.

    I wind up wasting time reading a verbose reorganization of fact, all to have to research his “facts” to learn he’s yet again making shit up.

    Technology & Globalization have depleted labor demand, everything from Turbotax for CPA’s, to drag/drop software that creates webpages in minutes instead of programmers over days or weeks, to traffic video camera’s reducing the need for police, Robotics for auto MFG’s in Detroit.

    The list is endless, and then we get into China, India, Mexico and anywhere else in the world where you can now find a college educated pro for a fraction the wages.

    You waste valuable time and resources debating with Mish, you might as well debate Beck, Alex Jones, Fox News or any of the Tea Party knuckleheads of the House/Senate.

    It’s exhaustive and disgusting to think these morons have followers who take them at their word.

  3. Bob K. says:

    Great report, but you are not the target company to dump people to part time. We are rapidly moving to indispensable and dispensable employees. I do not mean that pejoratively. an example. I own a construction company in the green energy space. I have two types of employees, electricians who are value add and indispensable to the success of my business and laborers while important I can train someone brand new how to install the systems they work on, in about two hours. However the laborers cost me almost 80% in labor costs of the electricians I use, due to Workers Compensation and Employment Compensation costs. My business is lumpy, and I have to pay for that insurance whether I use it or not when carrying employees, so it is my best interest of survival to simply rent that help from a labor pool than for me to carry full time employees (I also compete against firms that use off book help, meaning pay them cash, very common in CA). The food, and nearly all low to mid tier service businesses are in the same boat, so when you add an additional mandate like health costs that we have no idea what we are getting into, and every mandate simply grows over time, companies are going to err on the side of not taking the costs. It is common sense. Continue to make labor more expensive and you continue to get less of it. Not everyone is in 60% gross margin businesses.

    • Frilton Miedman says:

      With median personal wages @ $26K & the mean healthcare cost per person being $8.5K with a labor participation rate at 63% = an average cost of $13.5K for every working person,

      I can’t imagine anything more effective at reducing labor costs than making healthcare pricing more competitive.

    • DeDude says:

      However, the fact is that if the work is there, you will have to hire the people to get it done. Alternatively you can reject to take on the work and then someone else will take it on, and hire those people to get it done. So even if it makes you decide to not expand your business it does not affect society as a whole.

  4. cfischer says:

    Not an original thought of mine, but one I largely agree with, is that I can see there being a big increase in entreprenuership and startups as a result of the ACA. How many employees in their late 30′s/40′s with families and money in the bank are hesitant to start up their own firms because of they are worried about providing health care for their family?

    • Frilton Miedman says:

      This is a vastly underestimated benefit of Obamacare, I suspect you’re right, with healthcare cost being one of the biggest deterrents to start-ups.

      I also wonder how it will affect labor demand, in light of the fact that so many workers in large companies are there mainly for the insurance.

      • DeDude says:

        Agree. If you have a family member with a serious health issue the ability to retain health insurance becomes the central theme in what you do with your life and career. All other concerns become minor because you know that losing health insurance can quickly rob you of everything you own.

  5. bobmitchell says:

    “We know it has little or no impact on companies with much more than 50 employees, as they are locked into ACA regardless. Similarly, it has no impact on companies that have significantly less than 50 employees”

    What about the restaurant franchise companies that have reorganized into dozens of smaller businesses? There were several large, local groups that all did this. They were not “locked in”.

    The real point of obama care was to kill off the local chambers of commmerce and any lobby they still had left. The local chamber here was “bought out” by the larger regional fourtune 500 chamber within days of the act being signed. Guess who the largest local employer was in the larger group? The local health insurance non-profit feeding trough.

    It’s “working” exactly as it should. The metrics are there. The language is what is confusing people. This is not about helping people, it’s about “helping” health insurance companies.

  6. rwboomtown says:

    I read Mish and Barry regularly. I gain something from both. I am amazed at the venom shot at Mish in some of these posts. He called the housing crash two years before it went down (pretty good timing in the world of investing). He is also a critic of all aspects of government spending, including the pentagon. I’d love to see a two hour discussion between Barry and Mish on where they see the solutions to our completely corrupt system.

    • Frilton Miedman says:

      I have a friend that owns a construction co, a laborer of his convinced him to get out of new construction and into maintenance contracts back in 2006 after laying out the case for a real estate bubble.

      It’s nothing special that he got a call right, it’s that he insists on austerity & spending cuts immediately after a crisis that extracted 30% of the net worth of middle class homeowners – the worst possible thing you could do in that scenario. If memory serves, he’s also one of the nitwits that insists it was the CRA that caused it, completely ignoring the perpetrators to focus on the victims.

  7. GoodFriedman says:

    Serious problem with your argument, direct from the obamacare website: “The annual employer mandate fee (officially called an Employer Shared Responsibility Payment) is a per employee fee for employers with over 50 full-time equivalent employees who don’t offer health coverage to full-time employees.” No matter how big a company is, they can still save money by reducing the number of employees who are classified as “full-time.” Wal-mart already has health insurance for full-time employees, but many complain that the store managers structure their schedules to make sure they don’t qualify

    • Thats a valid issue — how can we track the changes attributable to that ? Hasn’t Wal Mart and others consistently played that game with part timers pre ACA?

  8. mbrmd says:

    A lot of good stuff to chew on here, including some interesting comments. This is why some of us really appreciate this blog.

  9. 4MYGRANDKIDS says:

    All of the above are the best argument for a single payer system required by all. Many corporations
    benefit by paying welfare wages and by part timeism to benefit their bottom line, and will never pay better unless forced to do so. By doing so, they force everyone else to subsidize them at taxpayer expense.

    see http://consumerist.com/2013/10/23/mcdonalds-mcresources-help-line-tells-worker-how-to-get-welfare-benefits/

    Walbarf does the same to the major benefit of the Waltons and to everyone else’s detriment.

  10. Greg0658 says:

    no tally machine at the banks, trade assoc. & Dept of Labor for me
    but see hear
    PT work under the guidelines set by gov(people) at the threshold of benefits kick in
    ie: the near slave setpoint iee: the underclass of people that attempts to provide mercantilist A the edge vs. mercantilist B and consumer A vs. consumer B

    the global labor force (under sufficient transporation fuel) has created the situation of abundant labor (more of something = less cost)
    saw comment about “indispensable and dispensable” or high skill worker * vs. vast unskilled workers SO this threshold of benefits set point under capitalist rules (for all but slaves)

    rotate vast pool of labor has value under guidelines set by gov(people):
    more alive = more consumption (everything including Education)
    spreading the available work is good
    law setpoint does not increase draw on mercantilist Estate – taxpayers yes – hense GOP kickback

    “increase in entreprenuership” – ok – that song, never get rich digging a ditch, but – taking on the SuperCorps – seriously ? now paperpushing there is an angle … 2nd reason opened this line = are the banks & IRS machines good enough to calculate the gov stipend for these .. I’m honest with the books because the threshold is friendly to me to be honest (and other reasons) .. deductions at SuperCorps is the opposite end of that argument for the gov(people)

    correlation to ACA – don’t see it either
    (except the kickback from the mercantilist Estate of feared power loss ie: ball & chain gone for those indispensables)
    (except2 The ACA Law is supposed to make it Fair for All without Hassle for All … a workpiece in motion)

    * key person

    ~~
    remiss not to LIST the vast number of reasons right here for change’g the opsys to another OpSys:
    (forget about it)

  11. RW says:

    The requirement that employers provide health insurance has been delayed until 2015 so we have a ways to go before this picture becomes more clear. This also means there is ample time to develop an official response to employers who cut hours in an attempt to evade the law.

    In the meantime Obamacare cannot be an incentive for employers to cut hours now so, setting aside the incentive(s) of Obamacare opponents to throw up any bad news they can think of, the question appears to be moot: (a) there is no incentive for employers to do this, (b) there is no evidence in the BLS data that employers are doing it and, (c) we have two years to refine the law WRT the possibility they might do it.

  12. DeDude says:

    Again even if it was true that something caused an increase in part-time jobs, why is that supposed to be a bad thing?

    In an economy that is seriously short on work, it would seem a lot better if available work is shared between more people. It is not just income that is lost when someone is full time unemployed – they also lose skills. Why would we think it is better that one person take a full time job and leave another completely without work and income, instead of the two of them sharing the pain.

    Eventually when we get back to full employment the market forces will take care of this. Employers who treat their employees bad (offer half-time no benefits jobs) will lose them to employers who treat them better. Those employees who found themselves treated like family will stay loyal and productive with their company, those who were not will not.

  13. Livermore Shimervore says:

    “However, the fact is that if the work is there, you will have to hire the people to get it done. Alternatively you can reject to take on the work and then someone else will take it on, and hire those people to get it done. So even if it makes you decide to not expand your business it does not affect society as a whole.”-DeDude

    ^ B_I_N_G_O

    This is PRECISELY why there are so many small business-owning Republicans who need illegal labor no matter how badly they denounce Obamacare. Tea Party from the left side of the face, Democrat from the right side of the face.

    P.S.
    Obamacare simply gets more people into the Titanic lifeboats, but just like with an all private health insurance system pre-ACA, the ship is going down either way.

    Solution: Stop aksing your employer to pay your health insurance premiums. Negotiate a higher salary and opt out of the healtcare plan. Take the extra pay and buy into a insurance pool. Or opt to pay the mandate penalty and take your chances. Do the same with Medicare, pay the annual benefit directly to the senior citizen, let the patient decide whether they want to have an exam or simply pocket the cost of the exam into their IRA. What they choose not to spend on healthcare they plow back into the economy instead of healthcare industry’s dark hole of bloated costs. Demand for healthcare services in both the private and public sector collapses as this GDP shifts from the unproductive to the productive. Real wages start to increase and its a whole new ball game. You simply can’t continue to spend 20% on GDP on healtcare when wages are flat and falling. Another $1.6 trillion productive GDP would probably halve unemployment. All because we are giving consumers more of their pay in dollars rather than plastic insurance cards.

    • Frilton Miedman says:

      While I agree with your lifeboat metaphor, I’m hopefully optimistic that open exchanges will encourage competition for insurers, in turn, they’ll seek competitive pricing from providers who will in turn seek the same of suppliers.

      The largest markups in healthcare are supplies and pharma, if the exchanges can affect competition there, it’ll be a success – otherwise, yeah, the lifeboat thingy.

      • Livermore Shimervore says:

        Sorry, but there will not be more competition, just sliglhtly less waste in some areas but surely more waste will emerge in others areas. When it comes to the govt and efficiency there is nothing new under the Sun, because its an extension of the politician/corruption. It’s a fundamental truth: any market where the majority bidders are playing with borrowed money is a Titanic headed for the iceberg. Any market where the majority of bidders are playing with free money (Treasury/Medicare) is headed for the Iceberg. Any market where the bidders are not the ones directly paying for the product is headed for the iceberg. Nothing in Obamacare nor the Republican’s non-existent/crony healthcare solutions will compel the creation of a legit bidder/seller market. It may slightly encourage more market-’ish aspects but the driving force will not have changed: the bidder and is not playing with their own money and consequent savings are not enriching them. You want to spend 20% of GDP on healthcare like the Scandinivians (along with education and wellness)? Fine. But the non-existence of a real market fed by a wallet of an unlimited Treasury spending/printing can only lead to ruin or a hamstrung economy that is losing competitive edge. Like there was no avoiding the implosion of securitization of everything and the kitchen sink by Wall Street and the banks, similarly there is no avoiding the implosion of a faux ~$2 trillion market by the healtcare/pharma lobby.

      • Frilton Miedman says:

        The Scandinavians don’t spend 20% of GDP. (provide a link if you stand by that)

        Denmark is the 2nd most expensive in the world at about 15% of GDP, we spend 17% of GDP.

        The rest of the developed world spends around 8% of GDP.

        That said, while I agree there’s too much government subsidy and too little true free market competition, I still remain optimistic that the exchanges may be a foot in the door for real capitalist competition – as insurers are forced to compete, they drive price competition for providers and suppliers.

        This isn’t quite like Medicare D, the consumer faces end prices, vs a blank check subsidy.

        It’s not a matter of whether there will be any competition, it’s a matter of whether it will be enough.

  14. Here are the major media coverage of this issue:

    • Don’t Blame Health Law for High Part-Time Employment (Real Time Economics)

    • What Happened to the Part-Time Employment Story? (Dash of Insight)

    • Fact Check: Employers are not cutting back workers hours because of Obamacare (CNN)

    • With One Obamacare Part-Time Jobs Myth Debunked,WSJ’s Moore Finds Another (Media Matters)

    Obamacare Isn’t Causing an Increase in Part-Time Employment, In One Chart (EPI)

    • Bartiromo says Obamacare is turning us into ‘a part-time employment country’ (Politifact)

  15. nofoulsontheplayground says:

    Barry, regarding the ACA, I have not heard any discussion about a work-around that may be possible for companies that have maybe between 50 and 500 employees.

    Rather than have workers employed by the company they work for, a company looking to get around the ACA could set up a separate employment agency to supply the workers. In turn, that agency could have subsidiaries broken down by specialties, and all with less than 50-workers each. All employees would be contract workers, beholden to the various agencies.

    I am not sure how the ACA works with employment agencies, but I’ve got to believe a work-around like this is actually possible. However, it is possible the IRS would not look too favorably at this treatment.

    What do you think? Do you think companies could actually do this to get around the ACA?

    • We work with one of the co-employee agencies (TriNet, Ambrose, etc.) to do the payroll processing, withholding, workers comp, etc. as well as process the health insurance — which is mandatory with them.

      And, they have 10,000 employees in their network — how can another network do a work around — inncorporate a new firm for every 49 people?

      • nofoulsontheplayground says:

        The example was for 50-500 employees. If someone had 175 employees, they could set up an LLC agency, and sub-contract to 4 other LLC’s, each contracting no more than 49-employees.

        You can’t do this on a large scale, but LLC’s are cheap to set up, and the administrative cost would be far lower than the fines for non-compliance on that small scale. If you’ve got an assembly shop in Mississippi with labor at $10.00/hour, I could see looking at something like this.

        Sorry, no law degree, and U of Phoenix should be shut down. The same goes for all other for profit universities.

        Good luck on the new venture, BR! It sounds pretty exciting!

  16. nofoulsontheplayground says:

    On the last post, there is another more overt way to attempt to work around the 50-employee mandate for the ACA.

    You could have an employment agency, set up like above, contract the employee for 20-hours, and another contract the employee for another 20-hours. Two part time 20-hour contract positions, no ACA.

    Again, it’s probably likely the IRS would spit at this as an clear attempt to circumvent the law, but until it’s tested, how would we know for sure?

  17. claytondaley says:

    Because this isn’t an experiment… because the counter-factual is unobserved… you can always claim that there’s no *direct* evidence related to ACA. However, it’s disingenuous to suggest that there isn’t compelling evidence on the question. France is famous for its slew of regulations with a discrete size threshold and the stunning distortions of firm-size distriubtion… i.e. charts found at http://cep.lse.ac.uk/pubs/download/dp1128.pdf

    It’s very likely that ACA will result in smaller distortions than French regulations. It’s also reasonable to argue that companies with 50-80 employees are not actively firing people. However, it’s also hard to claim that the regulations have zero effect on firm competitiveness. If ACA makes 50-80 person firms less competitive than their 40-49 employee competitors… the larger firms will be forced to exit the market at much higher rates. When combined with other frictions (like contracts), we should *expect* the effect to accumulate over the short-to-intermediate term.

    The general public doesn’t have the attention span (or expertise) to realize the strength of the body of evidence. The flaws in others’ data DO NOT mean that their conclusion is wrong (that would be an Argument from fallacy). You should give them credit for being on the right side of the issue (if begrudgingly) rather than feed the confirmation bias of people looking to discredit the argument.