Saturday, September 17, 2016

New Kaiser Survey Suggests ObamaCare Is Killing Jobs

By Michael F. Cannon
"Four percent of large employers are “reducing or planning to reduce the number of full-time employees that they intended to hire because of the cost of providing health benefits to them.”

ObamaCare will depress wages for high-skilled workers by 1.3 percent and for low-income workers by 3 percent.

Yahoo Finance’s Ethan Wolff-Mann, who may have the best name in journalism, writes it’s not true that ObamaCare has caused employers to reduce workers’ hours because the new Kaiser Family Foundation/Health Research Educational Trust survey found “a whopping 7% of employers with more than 50 employees actually gave part-timers full-time jobs since Obamacare was officially launched in 2013. Only 2% of employers cut full-timers to part-time.” Leaving aside the question of whether 7 percent is a whopping figure, the figures Wolff-Mann cites don’t necessarily support his claim.
ObamaCare’s employer mandate requires employers with more than 50 employees to provide a government-defined minimum amount of health insurance to all full-time employees, defined as those working 30 or more hours per week. Critics have predicted the mandate will therefore cause some workers employers to shift from full-time to part-time workers in order to avoid penalties.

Here’s how the authors of the report describe the findings Wolff-Mann cites regarding employers with more than 50 employees:
These firms were also asked about changes they planned to make or had made in the past year in response to the employer responsibility requirement. Two percent said they changed or planned to change the job classifications of some employees from full-time to part-time so that they would not be eligible for health benefits, while 7% said they changed or planned to change job classifications of some employees from part-time to full-time so that they would become eligible for health benefits. Other actions included 4% reducing or planning to reduce the number of full-time employees that they intended to hire because of the cost of providing health benefits to them, 2% increasing or planning to increase the waiting period before new employees become eligible for benefits, 12% extending or planning to extend eligibility for health benefits to workers who were not previously eligible, and 2% extending or planning to extend eligibility for more comprehensive benefits to employees previously eligible only for limited benefit plans.
A few observations.

First, the survey appears to have asked employers about changes they made in the past year or plan to make in the future, not about changes “since ObamaCare was officially launched in 2013.”

Second, there is wide variation in size among the employers in this group, from 50 employees to tens of thousands. The survey does not report how many employees work for the 2 percent of employers who reported they have moved or plan to move workers from full-time to part-time work, nor how many employees work for the 7 percent of employers who have done or plan to do the reverse, nor what share of these employers’ workforces the employers’ past and planned changes would affect.

Third, since the the survey also asked about planned changes, we don’t know how many of these reported shifts employers will fail to implement.

Fourth, even if full-time jobs are growing relative to part-time jobs, ObamaCare could still be inhibiting the growth of full-time work by slowing the growth of full-time jobs. The survey offers some evidence to suggest this might be the case. Four percent of large employers are “reducing or planning to reduce the number of full-time employees that they intended to hire because of the cost of providing health benefits to them.”


In other words, these findings may instead be consistent with ObamaCare inhibiting full-time work.
In his book, Side Effects: The Economic Consequences of the Health Reform, University of Chicago economist Casey Mulligan predicts:
The ACA will have the nation working fewer hours, and working those hours less productively, so that its nonhealth spending will be twice diminished: once to pay for more health care and a second time because the economy is smaller and less productive…
I predict that the ACA’s impacts—that is, the difference between the economy with the ACA and a hypothetical and otherwise similar economy without the ACA—will include about 3 percent less employment, 3 percent fewer aggregate work hours, 2 percent less GDP, and 2 percent less labor income…
[Some] 5 million workers plus roughly 5 million dependents will work part-time schedules as a consequence of the ACA…
Mulligan further predicts that even in firms that comply with the employer mandate, ObamaCare will depress wages for high-skilled workers by 1.3 percent and for low-income workers by 3 percent. (Look for my review of Side Effects in the upcoming issue of Cato Journal.) I have elsewhere provided ample evidence to suggest that beneath the aggregate numbers, ObamaCare’s employer mandate is in fact causing a shift to part-time work."

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