Saturday, March 15, 2014

ACA/Obamacare Employer Mandate: Hourly Work Week Trends In Low Wage Industries

“To understand both why the employer mandate needs fixing and what should be done, it helps to look at the data.”

“Among private industries where pay averages up to about $14.50 an hour, 30 million workers clocked the shortest average workweek on record in November — 27.45 hours — before a further drop in December and January that was at least partly weather-related.

On a net basis, the 644,000 non-management jobs added in these low-wage industries in 2013 through November averaged just 17.9 hours per week.

These grim data points suggest that too-few work hours, as well as low pay, should be part of the conversation on reducing inequality.

Yet these trends have been ignored, ironically, because of growing inequality in work hours. Because the rest of the private sector (managers and higher-paying industries) is clocking a longer average workweek than before the recession, making workforce-wide data look benign, economists haven't noticed that low-wage work hours are shorter, on average, than they were at the depth of the recession. (see two recoveries chart)

An honest discussion over ObamaCare's part-time effect must start with the recognition that something is seriously depressing the hours of low-wage workers.

Correlation — the drop in the low-wage workweek just as low-wage employers had a significant new incentive to cut work hours — does not prove causation. But there is other evidence also pointing to ObamaCare as a principal factor.

Anecdotes of employers cutting work hours to minimize ObamaCare fines have piled up in an array of industry groups where the workweek has been shrinking. Relative to the start of 2013, average weekly hours in November were down 1.2% at limited-service restaurants; 1.4% at supermarkets; 1.5% at clothing stores; 2.1% among providers of home care services to the elderly and disabled; 4.1% at sporting goods, book, music and hobby stores; 4.5% at home-center stores; and 4.9% at general merchandise stores.

The White House has said that a good way to test for an ObamaCare effect on work hours is the ratio of workers usually clocking 31- to 34-hour weeks vs. the number putting in 25- to 29-hour weeks. If that ratio were stable, it would be a sign that employers weren't adjusting work hours below the 30-hour mark. But in the fourth quarter of 2013, this White House-endorsed ratio fell to a 13-year low of 0.6, down 15% from a year earlier.

Predictably, that decline was concentrated in the low-wage segment. Among workers earning $7.25 to $10 an hour, this ratio of workers clocking just above ObamaCare's full-time threshold vs. those just below it sank 24% from the fourth quarter of 2012.

The claim that all job gains in 2013 were part-time was hogwash, but that does appear to have been the case among workers earning within a few dollars of the minimum wage.

An analysis of usual-hours-worked data suggests that all net new jobs in 2013 among hourly wage earners making $7.25 to $10 an hour had workweeks below 30 hours. (See article and accompanying note.)

While the more reliable workweek data from the establishment survey turned lower in the spring, the weakness in the household workweek data didn't become really obvious until the fourth quarter. But such a lag is largely to be expected, because the household survey instructions define "usual" as at least 50% of the time over the prior four or five months.

Because the establishment survey workweek data are telling a similar story, it's much less likely that the more volatile household survey hours-worked data are sending a false signal.

After another month or two of data that aren't infected by bad weather, it should be beyond dispute that ObamaCare's impact on low-wage workers is significant. The question, then, will be what to do about it.” - Fixing ObamaCare Employer Mandate For Low-Wage Workers, Investors Business Daily, 03/13/2014

Link to the entire article appears below:






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