Sunday, March 17, 2013

ObamaCare® Loophole Creates More Part-time Jobs

When Mitt Romney quipped that he had been unemployed, he never had to stand in an unemployment line. But millions of Americans who once did, have already exhausted all their unemployment benefits over two years ago --- and without every finding another job.

And of those who did, an ever increasing amount were only finding part-time work. Many were laid off again, only to eventually (if ever) find another part-time job. And many older workers were forced to take an early Social Security retirement.

And numbers show that it's only getting worse...and a loophole in ObamaCare® may also eviscerate worker's hours.

According to the Center on Budget and Policy Priorities, 8.7 million jobs were lost between the start of the recession in December of 2007 and early in 2010 --- just several months before the unemployment rate had finally peaked in October 2009 when the unemployment rate had "officially" peaked at 10.2 percent --- when 15.7 million Americans were reported unemployed (Currently the Bureau of Labor Statistics reports the unemployment rate as 7.7 percent with 12.0 million unemployed).

The "net" new jobs created since October of 2009, according to the Bureau of Labor Statistics, is about 5,400,181 --- which is just shy of the 6 million number I estimated 1½ years ago for high school and college graduates --- so job growth has not kept pace with natural population growth.

From the very beginning of the Great Recession in December 2007 to the present in March 2013, the U.S. population has increased by nearly 15 million people. And none of that is due to immigration. Last year the Wall Street Journal reported that the immigration rate as of 2012 was now ZERO (between 2005 and 2010, about as many left as came to the U.S.)

The Republicans and Tea Party have been constantly and bitterly complaining about "big government" ever since Obama was first elected. But for the 31st consecutive month, the number of government jobs was less than it had been a year earlier. The only comparable period in government data, which goes back to 1939, came after World War II. There is "somewhat" of an employment recovery, but it is mostly confined to the private sector.

But of those jobs created in the private sector, more and more of them are part-time jobs. Compared with December 2007, when the recession officially began, there are 5.8 million fewer Americans working full time. In that same period, there has been an increase of 2.8 million working part time.

When the recession began, 16.9 percent of those working usually worked part time. That share rose sharply in 2008 and 2009 and has not fallen much since then. Today the share of workers with part-time jobs is 19.2 percent. If you include both part-time workers who want full-time work and people who have gave up looking for jobs (but still want to work), the unemployment rate is actually 14.3 percent.

The ObamaCare® Loophole

Now factor in the newly proposed minimum wage laws and the new implementations of ObamaCare®. The new health care regulations going into effect are expected to reduce cash wages, as many employers of low-skill workers might have to pay fines of about $3,000 per-employee per-year if they don't offer healthcare insurance.

Low-skill workers have to compete with others for the same part-time jobs --- and part-times jobs are a popular loophole in the new healthcare legislation. (The minimum wage law restricts flexibility on cash wages, by establishing a floor, but makes no rule on fringe benefits.)

Several large employers --- ranging from restaurants and fast-food establishments --- to colleges that have a lot of part-time employees --- have announced plans to limit their employees to 25 hours per week in response to a loophole in the Patient Protection and Affordable Care Act --- aka ObamaCare® --- so they won't be required to offer healthcare.

In fact, major names in the service/hospitality industry (e.g., Denny's, Olive Garden, Red Lobster and Longhorn Steakhouse) are already in the process of going to a part-time employee schedule for all employees.

The ObamaCare® Loophole: The Affordable Care Act requires “large” employers – those with 50 or more full-time-equivalent employees – to either provide “qualified” health coverage for all of their full-time employees, or pay an annual penalty of $2,000 per full-time employee (after the first 30) if they don’t provide such coverage. If they do provide coverage, but it’s not “affordable,” the penalty is $3,000 per employee who finds it “unaffordable” --- with a cap at the penalty they’d pay for not offering coverage at all.

“Full-time” is defined as 30 hours or more per week, or 120 hours or more per month. (“Affordable” is defined as less than 9.5% of the employee’s family income.)

A study by Katherine Baicker, Ph.D.and Helen Levy, Ph.D., who write for the New England Journal of Medicine, finds that 33 percent of uninsured workers only earn within $3 of the current minimum wage, and that they will be at risk of unemployment if their employers were required to offer insurance --- and that 0.2 percent of all full-time workers and 1.4 percent of uninsured full-time workers would lose their jobs because of a health insurance mandate. Workers who would lose their jobs are disproportionately likely to be high school dropouts, minority, and female.

So with more and more employers already offering only part-time jobs, and more and more who will in the future only offer part-time jobs, it makes it increasing difficult for average working Americans to survive.

Acquiring a second part-time job may be an impossibility for a large number of service/hospitality employees (or for those who work in "big box" stores like Wal-Mart). Most part-time employees in these industries do not work full eight-hour shifts in a day. Rather, they work five to six days a week for four to six hours at a time. Thus, it may not be possible for part-time workers to work more than one job, because the days they will be available to work will have been constrained by the part-time job they are trying to supplement.

The Downward Spiral

Now we have fewer and fewer people working full-time, who can't contribute to the tax base to support government jobs, and who are earning less and less as hourly wages are not indexed for inflation every year, while the population continues to grow, as more and more jobs are being supplanted by outsourcing, automation and H-1B VISAs --- the downward spiral continues.

For the past 40 years, when the U.S. has had a Zero-Sum economy, the least-skilled workers have seen their wages fall over time; and despite the horrific time that older workers are currently facing, the squeeze on young people's pay is also only going to get much worse too --- again, the downward spiral.

In these days when a CEO earns an average of $13 million a year, (and/or 380 times their average employee), one has to wonder when the middle-class will completely disappear and we will only have two classes: "rich" and "poor" (with nobody in the middle). How long will it be before the average CEO is earning $100 million a year, while all their employees are working part-time for minimum wage with no benefits at all?

40 years ago I worked in a union factory making $7.50 an hour --- which today should be $38 an hour, but that job now only pays an average of $15 an hour --- and it is now only part-time, not full-time --- and it no longer offers healthcare insurance, a pension plan, dental insurance, sick days, paid vacation time or job security. Today we have "a right to work", that's all.

Today, if a CEO loses their job (or takes a pay cut for one year for "bad job performance", like JPMorgan Chase's Jaime Dimon did --- from $23 million to $11.5 million), they don't have to change their standard of living or frantically scurry to apply for unemployment benefits or food stamps (and then be ridiculed for being on the government sole). These CEOs don't have to worry about a place to sleep or putting food on their table --- not like millions of other Americans who now have to today...and will continue to so, well into the foreseeable future.

* Less labor unions + outsourcing + inflation + robotics and automation + H-1B VISAs = an over-saturated job market = depressed wages with less hours and no employee benefits = overall lower standard of living. Of all the industrialized nations, over the last 10 years Credit Suisse reports that America has dropped from #1 to #7 per capita income.

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