Saturday, October 12, 2013

ObamaCare really did give hourly wage employers an incentive to force workers into part time in early 2013

Andrew Puzder, CEO of CKE Restaurants, has an op-ed in the Wall Street Journal explaining why Obamacare is problematic for some employers owning small businesses, especially in the franchise world where people own a few stores of a larger franchise. It’s “A CEO’s Eye-View of ObamaCare”, link here. A basic concept is that the employer mandate is based on full time hours in the previous year.  

Around July 1, 2013, President Obama delayed the employer mandate until January 1, 2015 (Huffington story here) , but that means that employers had an incentive, through the first half of 2013 (before the delay), to reduce the number of full-time employees and increase the number of part-timers to get the work done. They will have the same incentive throughout all of 2014.  Puzder's article wasn't quite clear on the way the timing of the delay really worked, but the general concept of his argument is right.

There is no question that the part-time issue is a serious flaw in Obamacare with unintended consequences, and it should be changed quickly, but not until the debt ceiling controversy is resolved and the government reopens.   
   
This is more the case in service businesses and low-wage areas, the kind that Barbara Ehrenreich wrote about in “Nickel and Dimed”.   In the world of salaried professionals, employers still have plenty of incentive to offer insurance and generally don’t want people to be full time because of the continuity of the work.
  
It seems that skimping on insurance is like skimping on wages.  People at the low end of the service world don’t have much market power on their own, and don’t have the ability to organize.  So, like low wage workers in manufacturing overseas, upper middle class American consumers tend to exploit them without realizing it.  Is it any surprise that employers do the same?  The problem reminds me of the debate in the District of Columbia over the “living wage bill” and Wal-Mart. 


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