Is Obamacare creating a nation of part-time workers? It's iffy, jobs numbers say.(Read article summary)
August jobs report, other studies weaken notion that part-time workers will become a bigger part of the economy. The Obamacare effect also seems limited, but jobs data are too volatile to say for sure yet.
For a sector of the labor force that toils in mostly low-paid, low-visibility jobs, part-time workers have been getting a lot of attention lately:
In a little over a month, the White House, a US senator, the AFL-CIO, the US Chamber of Commerce, and numerous publications have weighed in on a disturbing trend. As Sen. Susan Collins (R) of Maine pointed out early in August, the “overwhelming majority” of jobs created so far this year were part time. Critics were quick to blame the pending health-care law, because employers don’t have to offer health benefits to those who work less than 30 hours a week.
Will health-care reform turn us into a nation of part-time workers?
On Friday, that political firestorm got the statistical equivalent of a good soaking. New jobs numbers from the Bureau of Labor Statistics (BLS) suggested that 60 percent of this year’s new jobs are part-time, a majority but not Senator Collins’s overwhelming majority. And all those people who wanted to work full time but were getting their hours cut? Their numbers declined to a five-month low.
Ever since Mark Twain drew the connection between lies and statistics, Americans have known to beware of politicians spouting figures. The latest data handwringing, however, is more nuanced. Sometimes, politics and journalism get ahead of reality by relying on figures that are far too volatile month to month to draw conclusions about long-term changes.
A month ago, for example, Collins was right. BLS figures showed that a whopping 3 in 4 jobs created from January through July were part time. But the new August numbers, plus substantial revisions to prior months, cut that margin to 3 in 5. Moreover, a Federal Reserve Bank of San Francisco study published even before Friday’s new numbers suggested that part-time work as a share of all jobs was not unprecedented, although unusually persistent.
Using part-time jobs to judge the strength of a recovery is a little misleading, anyway. Most people work part-time because they choose to, not because a bad economy is forcing them to. According to the BLS, 18.9 million workers in August worked part-time for noneconomic reasons (they had to take care of children or other family members, attend school, keep their earnings below certain Social Security limits, and so on). Only 7.8 million workers worked part time for economic reasons (for example, they couldn’t find work or their hours got cut). It’s this second group of so-called involuntary part-time workers who highlight the weak and unsatisfying economic recovery now under way.
More than half of them – 4.7 million – are working part time often because their employers cut their hours in the wake of a slowdown in business or other unfavorable conditions. One looming unfavorable condition for many businesses these days is Obamacare. The US Chamber of Commerce has warned the health-benefit mandate would kill jobs. Even supporters of health-care reform, such as AFL-CIO President Richard Trumka, complained recently at a Monitor breakfast that the new law was causing companies to reduce hours of their part-time workers to under 30 (the law’s definition of a full-time work week). The White House has countered the suggestion with a blog post, blaming the sequester instead.
So who’s right? There’s strong anecdotal evidence that some employers are cutting back employee hours below 30 to avoid having to pay health benefits. Investor’s Business Daily has cataloged 258 employers who appear to have made the move. Other companies have cited economic reasons for cutting their employees’ hours. The question is: How much of an impact is that having?
“It seems at least clear that some [employers] were shifting their emphasis to part-time workers,” says Rob Valletta, research adviser at the Federal Reserve Bank of San Francisco and coauthor of the recent report. “But … it seems pretty small.” Long before Obamacare, employers had an incentive to create part-time jobs to avoid federal tax rules that protected health benefits of full-time workers, he points out. Also, research suggests no more than a rise of 2 percentage points in the incidence of part-time work.
In the grand scheme of things, the Obamacare effect may not loom large. As a share of the total work force, those involuntary part-time workers make up only 5.7 percent of all employed workers, down from a peak of 7.1 percent in September 2010. If anything, the US has a shrinking share of those workers, although we seem to have been treading water since the beginning of 2012.
But in specific low-wage industries, such as bakeries, social assistance to elderly and disabled, and home improvement stores, as Investor’s Business Daily points out, the work week has fallen to record lows for nonmanagers. Thus, the economic effect might fall hardest on workers who were supposed to be the biggest beneficiaries of health-care reform: less-educated Americans working part time in low-paid jobs.
All this is guesswork, admittedly, based on figures that could be revised up or down in the months to come. The Obama administration pushed back the mandating of health benefits until next year. Until it’s in effect, we really won’t know for sure whether health reform will create a growing share of part-time workers.
“It is very volatile data,” Mark Zandi, chief economist for Moody’s Analytics, told reporters in a conference call Thursday. “It’s much too early to conclude that there’s a shift going on.”