Sunday, July 14, 2013

ObamaCare™ does NOT create part-time jobs

Employers create part-time and temp jobs to lower their overhead to save payroll costs on the their bottom lines. Let's first look at a few numbers and the current job market. Then we'll look at ObamaCare™ and its alleged relationship to creating part-time jobs.

The Bureau of Labor Statistics (PDF) - Comparing benefit costs for full- and part-time workers: "Health insurance appears to be the only benefit representing a true quasi-fixed cost to employers, meaning that the cost per hour worked is greater for part-time employees than it is for full-time employees." 


Layoff Events

Initial Claims

2008 21,137 2,130,220
2009 28,030 2,796,456
2010 19,564 1,854,596
2011 18,521 1,808,451
2012 17,080 1,666,931
2013 6,587 642,103

Historical Archives

Over the span of 4 years (2008, 2009, 2010 and 2011) the total number of initial claims associated with mass layoff events were 8,589,723. Including 2012 and in 2013 so far, there were a total of 10,898,757 layoffs.

According the Bureau of Labor Statistics JOLTS reports, during this same period of time, most hiring and separations where because of temporary jobs (hiring > involuntary separations > rehiring) and not because of actual churn (quits) in the labor market, where people would voluntarily leave their permanent jobs to seek out employment elsewhere. And it has absolutely NOTHING to do with ObamaCare™.

* Temporary jobs might include tax preparation in the Spring, fast-food service in the Summer and retail help during the Holiday season in the Fall and Winter.

According to the Bureau of Labor Statistics (PDF), prior to 10,898,757 layoffs between 2008 and 2013, from 1996 to 2004 there were also a total of 9,404,601 tech jobs lost to offshoring ("overseas relocation"). Over the course of the last 17 years, the U.S. lost 20,303,358 jobs --- about the same number of Americans who can't find full-time work today.

The unemployment rate peaked in October 2009, when the Bureau of Labor Statistics reported that the unemployment rate was 10.2 percent with 15.7 million people unemployed. The official Great Recession lasted from December 2007 to June 2009, when most of the job losses had occurred. According to the Center on Budget and Policy Priorities, 8.7 million jobs were lost during this period time before we started seeing positive job growth in March of 2010 (See the chart further below.)

March of 2010 was also when President Barack Obama signed the Affordable Care Act. Million of jobs had already been lost long before ObamaCare™ had even passed Congress, and years before a mandate was ever to be implemented. Temp and part-time hiring has been going on for the past 5 years, but now business leaders and their pundits are saying that it's because of ObamaCare™ that this happening. 

In the past, whenever we had a slowdown in hiring, they would also blame the minimum wage, the Equal Employment Opportunity Commission (EEOC), the AFL-CIO and other labor unions, the Occupational Safety and Health Administration (OSHA), the National Labor Relations Board (NLRB), the various other consumer protection agencies, the Environmental Protection Agency (EPA), corporate taxes, the cost of energy, natural disasters and the weather.

These business interests have always had some reason for not paying workers fairly and offering them reasonable benefits. That's why wealth inequality in the U.S. is worse than in most developed countries. Now ObamaCare™ is just another one on their long list of excuses for not hiring. The same excuses they always use for offshoring jobs, replacing workers with automation, advocating for "right to work" laws, using jobs as hostages while negotiating tax breaks, busting labor unions and using H-1B visas to import stuff extra cash into the bottomless pockets of the corporate executives at the expense of those who are already barely getting by. Social Security reports that 50% of all American workers net $27,000 a year or less --- and according to a Gallop poll, less than half of those had employer-based healthcare coverage.

Recently in the New York Times Casey B. Mulligan writes, "The Affordable Care Act’s employer mandate will eventually levy a penalty on large employers that do not offer affordable health insurance to their full-time employees. Employers have been complaining about the penalty, saying it will reduce the number of people they hire and cause them to reduce employee hours."

So does that mean that if a company like Boeing received an order for a ten 787 Dreamerliners tomorrow, and the customer wanted them all delivered by the end of the year, Boeing would cut hours and not hire anyone (and be late with the delivery) just because Boeing would have to pay an employer mandate for ObamaCare™ next year? I don't think so.

And then in another article by Casey B. Mulligan he writes, "Because part-time workers will be eligible for the subsidies, except in the rare instances in which their employer covers them, full-time work will no longer carry the advantage of access to health insurance. That by itself will encourage more people to seek part-time work." Is he kidding me?

Annie Lowrey, in another New York Times piece, writes, "The June jobs report saw a surge in part-time workers, and the health care law that starts coming into full effect next year might be in part responsible." Sorry, wrong again.

Everybody at the New York Times (not to mention Fox News and all the conservative websites) seems to think that ObamaCare™ is causing all the temporary and part-time jobs. But this trend has been going on for the past 5 years, long before the mandate was ever supposed to kick in.

A few days ago the Center for Public Integrity wrote, "According to the Kaiser Family Foundation, 98 percent of companies with 200 or more workers provide [healthcare] coverage, and 94 percent of those with 50-199 workers do. This means that the part of the reform law the administration is postponing until 2015 — the requirement that employers with 50 or more workers offer coverage — affects only a very small percentage of companies --- between 1 million and 1.5 million people."

The reality is, since the Great Recession, employers have learned to do more with less...and cutting payroll was their major cost cutter...long before a mandate for ObamaCare™ was ever to be implemented. Look at the numbers below. This has been going on long before ObamaCare™ was even a twinkle in your daddy's eye.

And remember, the cost of hiring new employees is also tax deductible too. A tax advocacy group says Facebook (which made $1 billion in U.S. profit before taxes last year) will pay no U.S. income tax for 2012. That's because of the sizable tax deduction from stock options that companies like Facebook issues to its corporate executives. Stock options, like regular cash salaries, are tax-deductible for companies.

While the fine for not providing healthcare coverage isn't tax-deductible, the Affordable Care Act does provide for a tax credit. And as Forbes has noted, employers have another loophole. Employers can avoid the strong penalty and gain eligibility for the weak penalty by offering “minimum essential coverage" or ‘skinny’ coverage.

ObamaCare™ isn't forcing most employers to hire part-time workers. That's total bull$hit. Employers (like the executives at Facebook) just don't want to pay the 3.8% surtax for ObamaCare™ on their unearned "investment income" --- those millions of dollars that they rake in every year with capital gains on their stock options...paying a tax rate of 20%, which is lower than Warren Buffett's secretary --- and which is often less than their corporate tax rate as well.

ObamaCare™ has VERY LITTLE (if anything) to do with the additional hiring of more part-time or temp workers. One would have to be deaf, dumb, blind and mentally challenged to believe that WITHOUT the healthcare mandate employers would suddenly start flooding the labor market with millions of permanent full-time jobs paying a living wage. Dream on!

Just two days ago both the Dow Jones and the S&P 500 broke another all-time record (again). The only thing that eliminating the healthcare mandate will accomplish is, allowing the corporate executives to stuff more cash into their bottomless pockets --- that's all.

NOTE: In a June 2013 statement acting Labor Secretary Seth D. Harris said 7.2 million private sector jobs were created over the last 40 consecutive months. That would be from March 2010 (when net new jobs started being created) to June 2013 ( as shown in a table further below). Out of a total work force of 155,835,000: Currently 144,058,000 Americans are employed --- 116,788,000 work full-time (35 hours or more a week) and 27,270,000 work part-time (34 hours or less per week) and 11,777,000 are counted as unemployed --- meaning 74.94% of the total work force is employed full-time, 17.49% work part-time and 7.55% are unemployed.

(Find other relevant government data I compiled here and here and here with links to government stats.)

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