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Are employers hiring part-timers to avoid Obamacare costs?: Examiner Editorial

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Opinion,Editorial,Barack Obama,Obamacare,Jobs,Health Care,Employer Mandate,Washington Examiner

Last month, the Commerce Department reported that the U.S. economy sharply contracted during the first quarter of 2014. Then on July 3, Commerce reported a gain of 288,000 jobs for June, the fifth-largest monthly increase of President Obama's tenure. Perhaps things are finally improving. Or perhaps there's something ugly beneath the surface.

The Labor Department's household survey reveals that the economy lost 523,000 full-time jobs in June. At the same time, it gained an astounding 799,000 part-time jobs - the largest such monthly jump in two decades. Part-time jobs now top 28 million for the first time since last July.

'The economy lost 523,000 full-time jobs in June [and] gained an astounding 799,000 part-time jobs.'

This shift to part-time labor is an echo from June 2013, when the economy added 360,000 part-time jobs and shed 240,000 full-time ones. So why has history thus seemingly repeated itself? One possibility is that Obama decided last July to delay Obamacare's employer mandate from 2014 to 2015.

Employers added 700,000 part-time workers between April and July 2013 to what were already historically high levels of part-time work. Such numbers may reflect employers who were bracing for a mandate they expected to begin in January 2014 – a requirement that businesses with a certain number of full-time equivalents provide health insurance for all of their full-time workers or else pay per-employee fines.

There are two distinct ways for companies to reduce the damage from Obamacare's mandate. Smaller ones can reduce their full-time equivalents below the point that the mandate applies to them. But larger ones can also reduce the number of full-time employees who will have to be covered, either by reducing hours or adopting a part-time hiring strategy. After Obama delayed the employer mandate last July, part-time employment fell off by nearly 1 million. Twelve months later, the same Obamacare-related incentives are back, and so is the number of part-time workers.

In January, the IRS marked off July 1, 2014, as the last day for companies near the 100-employee threshold to begin the six-month measurement period determining whether the employer mandate applies to them in 2015. But if they choose, companies can wait as late as September 1 to start the measurement period for whether each particular employee is counted as full- or part-time for purposes of coverage or penalties.

That's a complicated way of saying that, if Obamacare is prompting a shift to part-time positions, the government’s employment data would look an awful lot like those just announced. There will also likely be further increases in the number of new part-time slots in coming months.

There's no conclusive evidence linking Obamacare to the growth in part-time employment. But it's worth noting that the U.S. is enduring a recovery so slow by historical standards that it cries out for an explanation. The share of Americans working remains at a 30-year low, and ever since the recession ended, the share of American workers in part-time jobs has remained stubbornly close to the previous 20-year high. If this were a murder case instead of an economic basket case, Obamacare would be the prime suspect.

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