30-Hour Dividing Line
The results, seen in the accompanying chart, are striking. After leveling off for a couple of years as the
economy
recovered from recession, the ratio began a sharp and sudden dive in
2013. In June of this year, there were 191,000 fewer workers with usual
work schedules of 31 to 34 hours in their main jobs than at the end of
2012, a drop of 8%. Meanwhile, an additional 406,000 people usually
worked 25 to 29 hours, up 12%. These figures average 12 months of data
because the U.S. Census' Current Population Survey (CPS) data are
volatile from month to month.
The divergent shifts on either side
of the 30-hour divide coincide almost perfectly with the initial
measurement period for ObamaCare employer penalties that began in 2013.
Potential liability is determined a year before the penalties are
actually imposed, so employers began responding in a pretty big way in
early 2013.
While the data show that the shift away from a 31- to
34-hour workweek became obvious in the final quarter of 2013, the data
are consistent with employers adjusting work hours months earlier.
That's not only because it takes some time for employers to implement
such changes but also because census interviewers ask people to give
their most frequent schedule over the past four or five months.
The timing also matches the surge in anecdotal reports of employers cutting work hours, which IBD collected in a
database that grew to 450 employers.
The
timing also matches up well with the relapse in the average workweek in
low-wage industries. That's evident in the other chart based on Bureau
of Labor Statistics data from the monthly establishment survey.
As noted above, the White House economists tweaked their test of
ObamaCare's impact.
Initially, they had counted the 5 million or so people reported by the
census to be working exactly 30 hours a week as full-time under
ObamaCare. Once IBD brought it to their attention that the census rounds
up, counting 30 minutes or more as a full hour, the White House
acknowledged that including those workers "may be misleading."
New Studies Claim No ObamaCare Jobs Impact
That
rounding problem is all the reason needed to dismiss one of three new
studies casting doubt on ObamaCare's impact on work hours. The authors
of an
Urban Institute study treat all 5 million 30-hour workers as full time, rendering their analysis unreliable.
Indeed,
there were numerous reports of employers cutting workers to 29.5 or
even 29.75 hours. Economists have noted that workers with their hours
closest to 30 are most likely to have their schedules trimmed. Not only
is it less disruptive to worker morale to lose a half hour of work, as
opposed to 3 or 4 hours, but the penalty is greatest per hour of work
for those working exactly 30 hours.
For companies that provide
coverage to most workers over 30 hours, that penalty equals $3,120 per
uncovered full-timer in 2015. Remember that the penalty is paid after
taxes. Converted to the equivalent in tax-deductible wages, the fine is
equal to about $5,120 in wages for a company facing the average combined
federal and state tax rate of 39.1%.
Now it's fair to say that as
employment has picked up and the jobless rate has come down, companies
have likely become somewhat less concerned about ObamaCare penalties and
more concerned about finding and hanging onto good workers. But as the
penalty grows from year to year (along with the growth of the average
national health insurance premium), so too may its bite, particularly as
the economic cycle begins to turn."
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