• The blame game of the employer penalty

    There was a piece in the WSJ yesterday on how some full time jobs are being changed to part time jobs. I braced myself for the usual blame on the ACA. And it was right there in the beginning:

    Ken Adams has been turning to more part-time workers at his 10 Subway sandwich shops in Michigan to avoid possibly incurring higher health-care costs under the new federal insurance law.

    He added approximately 25 part-time workers in May and June as he reduced some employees’ hours and replaced other workers who left. The move showed how efforts by some restaurant owners and other businesses to remake their workforces because of the Affordable Care Act may be turning the country’s labor market into a more part-time workforce

    Look, I do not dispute that the employer penalty creates a new enticement to employ part time over full time workers. But it worth remembering – always – that insurance is not mandated in any way right now, and it’s still offered in the vast, vast majority of jobs given by large companies. Why? Because benefits are important to attracting and retaining a competent work force. If you don’t offer them, you don’t attract the best employees, and you often lose them if you have them. So it’s not like there aren’t good reasons to offer insurance.

    But I was impressed with the piece, because it was far more balanced than what I usually see:

    Ethan Harris of Merrill Lynch is skeptical that health-care-related hiring by restaurants affected the overall jobs numbers. “Some companies have started this spring to redesign their workforce to keep people” beneath 30 hours a week, he said, “but it should be reflected in the average work week…and it is just not showing up in the data.”

    The average workweek for restaurant and bar staff has ticked up slightly this year through May to 25.6 hours, from 25.5 in 2012 and 25.1 in 2007, the year the recession took hold.

    Mr. Harris said restaurant employment rolls might have risen partly because more Americans in a wobbly economy are willing to take jobs that previously were filled by undocumented workers and therefore weren’t counted.

    The numbers also likely reflect a stronger economy.

    But the bottom line is that if you really, really hate the fact that the employer penalty will incentivize to make workers part time, then change the penalty. You’ll have the full throated support of many wonks.


    • Shouldn’t this be one of those cases, Aaron, where the median would be a much better indicator? If most people are working less but a few are working more, wouldn’t that be a better indicator of economic conditions? I support the ACA by the way as one step to universal health care; which is what is really needed.

    • Hi Aaron,

      I work for a large retail chain in the northeast, and we are covered by a union.

      Recently the management changed the policy of part time workers and now they are no longer allowed to work more than an average of 30 hours per week. I asked and I was told this is directly in response to the mandate.

      Also, it is my understanding that next year health insurance will no longer be offered by the company for part time workers. However, I have been unable to clarify whether this is directly in response to the healthcare bill.

      Best regards.

    • Never the less to have different laws for people who work part time and for employers with fewer employees seems like very bad policy. Our politicians should rethink these things and we the voters, should not accept any excuses for this sort of thing.