Pethokoukis, Economics, U.S. Economy

Part-time Nation: Was the April jobs report really the Obamacare jobs report?

Credit: Obama White House; AEI

Credit: Obama White House; AEI

US job growth in April beat economist expectations as nonfarm payrolls rose 165,000, and the jobless rate fell to a four-year low of 7.5%. But the report contained worrisome signs that President Obama’s health care reform law is hurting full-time, high-wage employment.

While the American economy added 293,000 jobs last month, according to the separate household survey, the number of persons employed part time for economic reasons — “involuntary part-time workers” as the Labor Department calls them – increased by almost as much, by 278,000 to 7.9 million. These folks were working part time because a) their hours had been cut back or b) they were unable to find a full-time job. At the same time, the U-6 unemployment rate — a broader measure of joblessness that includes discouraged workers and part-timers who want a full-time gig – rose from 13.8% to 13.9%.

What’s more, there wasa  0.2 hour decline in the length of the average workweek. This led to 0.4 percentage point drop in the index of average weekly hours, “equaling the largest declines since the recovery began,” notes economist Dean Baker of Center for Economic and Policy Research.

Let’s see, more part timers and fewer hours worked. Economist Douglas Holtz-Eakin says what we’re all thinking: “This is not good news as it reflects the reliance on part-time work. … the decline in hours and rise of part-time work is troubling in light of anecdotal reports of the impact of the Affordable Care Act.”

Anecdotal reports like this one from the Los Angeles Times: “Consider the city of Long Beach. It is limiting most of its 1,600 part-time employees to fewer than 27 hours a week, on average. City officials say that without cutting payroll hours, new health benefits would cost up to $2 million more next year, and that extra expense would trigger layoffs and cutbacks in city services.”

Now, there is the possibility that government furloughs are affecting the length of the workweek. (Though at the same time, steady if unspectacular private-sector job growth shows the Fed may be continuing to effectively offset any negative sequestration impact.) Here is JPMorgan on the subject:

Government shed a trend-like 11,000 jobs last month, a number which bore little evidence of a meaningful sequestration impact. Similarly, it is hard to directly link the decline in the average workweek to furloughed government workers, as the workweek only measures private industry hours. It’s conceivable the decline in the workweek may be related to the Affordable Care Act, but a simpler explanation is that it had jumped two ticks in the prior two months, and through the month-to-month noise is just settling into a stable trend.

We’ll see. But the combo of data and anecdotes should at least raise red flags about how health care reform could be permanently altering the structure of the American labor market.

A few other points:

1. The labor force participation rate was dead in the water. If it were back to January 2009 levels, the U-3 unemployment rate would be 10.9%. Demographics are playing a role here. But even taking that into account may put the real unemployment rate in the 9% to 10% range.

2. Only 53.9% of private industries added jobs last month, the second lowest of the labor market recovery, according to JPM.

3. Even with the unemployment rate at a misleadingly low 7.5%, it is way above where the Obama White House predicted it would be if Congress passed the 2009 stimulus, as the above chart shows. Back then, Team Obama thought 5% was the economy’s full-employment rate but recently has upped that number to 5.4%.

4. If the economy continues to add jobs at the 2013 pace of 196,000 a month, the labor market would return to pre-recession employment levels in seven years and ten months, according to the Hamilton Project’s “jobs gap” calculator.

Credit: Hamilton Project

Credit: Hamilton Project

39 thoughts on “Part-time Nation: Was the April jobs report really the Obamacare jobs report?

          • “Upon further review”, I have to admit you are right, mesa. He is not being sarcastic. He really does think ObamaCare is the equivalent of sunspots.

          • Yep, this is classic leftist vacuum-brain economics.

            They/Toad honestly believe that businesses are inherently evil and can do whatever they want, including pay for enormous healthcare expenditures for employees, and operate outside the laws of economics. Cost means nothing.

            If it weren’t so dangerous (we are witnessing the effects of this type of thinking right now), it would be hilarious.

    • I mean this in all seriousness, Toad: do you actually believe that Obamascare – the largest socio-economic piece of (crap) legislation in 80 years – won’t have massive adverse consequences?

      If so, I invite you to do us all a favor, and please insert yourself backwards at the nearest train track or heavily traveled high speed freeway.

      Please relieve the rest of sentient society the burden of having to compensate for your punishing, staggering ignorance.

      • “Yes, businesses are shifting to sub-30 hr work weeks, increasing the number of part time employees, to stay under the Obamascare threshold.”

        Anecdotal, but a friend of mine owns several Pizza Huts and he is doing exactly that with all but his most essential employees.

        • My friend coyote (see the Forbes article) is doing the same, as are most of the service industry.

          Not a few, or some. Most.

        • The beauty of it is, as more and more work is shifted to part time employees, the unemployment rate (at least what the media publishes) will go down.
          Because, hey, lose one guy working 40 hrs a week, gain 4 people working ten hours a week – a net gain of 3!
          The sad part is how many people actually pay attention to unemployment stats. The only things that matter are total hours worked and average wage – and there hasn’t been much progress in those areas.

          • Exactly,everything the regime does is politically based.
            They had all this figured out.
            They knew every firm in the country that can keep their employees below 50 will do so and that leaves a big glut of part time employees to be hired. That alone will push the phony employment numbers up which is all most Americans see.
            This is due to the bias of the DBM.
            It’s all a perfect storm and we were/are played like a political fiddle once again.

  1. The hilarious/tragic part of this is today’s report is the best it will get, until Obamascare is destroyed.

    I believe it will be destroyed, either by force, or by implosion, because it cannot function. It is so bad, people have no idea how awful their health care is about to get.

    In 5 years, if the country still exists, people will be demanding that it be redesigned, or outright removed.

    • Mesa,

      “It is so bad, people have no idea how awful their health care is about to get.”

      But don’t you think that was the plan all along? Obamcare was designed as a stepping stone to Single Payer.

      • Yes and no.

        Yes, single payer is the goal, but no, people do not understand how bad this is going to get.

        And they definitely don’t understand how bad single payer is.

  2. I was wondering where you guys would find the “bad news” in today’s jobs report. Here’s the problem, you analysis doesn’t even pass the sniff test.

    Starting with your basic premise .. that there was a massive decrease in the part-time for economic reason numbers. Did you bother to look past last month or at any of the sub-categories? The entire “loss” was in “slack-work or business conditions” also known as “furlough”. The important number .. the people that couldn’t find full-time work .. actually decreased as it has the last two months.

    And your argument about the average work-week? Yea, hasn’t really changed in more than a year. While we can argue that isn’t good either, the wages associatd with that have changed in a positive direction.

    And finally .. why do you compare with January 2009? You do know that George Bush was in office for that month, right? Why not use February 2009 or the end of the recession as a start? Could it be that you are trying to game the system in order to make a certain President look bad? Naw, couldn’t be .. your impartial .. it must be Obamacare.

    • Obviously someone either doesn’t remember or is too young to have noticed how monthly jobs reports better than this were used to batter Bush about the “jobless recovery”. Now it’s strong indication that Slow Joe Biden’s “Recovery Summer” is just around the corner once more.

      It’s more about media fawning than about “bad news”. The actual bad news not being reported is that the economy sucks, it’s not getting better very fast, and Obama has been at the helm for over four years now.

      I expect to see a real recovery [which the media will attribute to Obama] begin in about November 2016 *if* a Republican is elected President.

    • Liberals have very short memory.
      Here is the refresher:

      Reagan’s ended Carter’s malaise and created 8 million + jobs. Liberals were quick to denounce them as minimum wage jobs.

      Bush inherited Clinton’s internet bubble burst, dealt with 9/11 and its aftermath, before sliding back into Housing bubble burst. Liberals called his economy “Jobless Recovery”.

      Many companies have already begun to transform their workforce from FULL time to Part time in anticipation of Obamacare.
      Has any of the Liberal EXPERT broken down the numbers and explain how many of the jobs created are Part time and how many of them full time?
      How many of these jobs are well paying as opposed to “Minimum Wages”?

  3. I wish websites would get in the habit of providing datasets (or links to the source) with any graphs they publish. Anyone capable of reading a graph has access to tools to play with the underlying data. In this case I would like to see a fourth line on the graph: the gap between reality and expectation.

    • I wish websites would get in the habit of providing datasets (or links to the source) with any graphs they publish“…

      Well for what its worth you could consider this CNBC article April Jobs Aside, US Is Falling Behind by Larry Kudlow…

      It has some interesting links to other stories and what caught my eye were these two sentences: Nonfarm payrolls remain 2.6 million short of the prior peak reached in January 2008. What’s more, roughly 22 million people are effectively unemployed because they’re actually not working, underemployed, or forced to work only part time.

  4. My grandkids are much more entertaining than mesa or paul. Smarter too.

    Seriously. The trouble with dogma is that Paul is much more likely to believe his Pizza Hut “productive class” bud than the Minneapolis Fed. “So far, few employers cutting workers to part time in response to Affordable Care Act”

    But let’s go to the numbers. There 7.9 million involuntary part-time workers in April. In January there were 7.9 million involuntary PT workers. In December there were 7.9 million involuntary parttimers. In fact, in every month since 1/1/2009, save two, there were MORE THAN 7.9 million invol PTers. The high was 9.2 million in 9/2010. (search for historical data.)

    Those are absolute numbers. How about involuntary PTers as a percentage of the workforce (5 percent in April)? Well, it hit 6.5 percent in 1983, and was greater than 4.5 percent every year until Clinton’s first term.

    Why big movements by employers to involuntary PT in 1983 and 2010? In short, because employers CAN in bad job markets. Obamacare is something else. No doubt some employers will deny workers something they want (healthcare) by taking something else away (hours) but that may be overly exploitative even by mesa and paul standards.

    BTW, when you 20 PERCENT PARTTIME EMPLOYMENT!!! you are being misled. Two-thirds of PTers want it that way as mothers, students and retirees.

    • “No doubt some employers will deny workers something they want (healthcare) by taking something else away (hours) but that may be overly exploitative even by mesa and paul standards.”

      That’s even dumber than your first moronic post above.

      Exploitative? It is a rational response to government action – it’s not exploiting anything.

      Do you think that high earners are being “exploitative” by reducing their output, to stay below the $250,000 Obama tax? That’s a rational action, too (I know several people who are doing just that currently).

      You are displaying all the signs of classic leftist economic delusion syndrome: “greedheads” operate in a vacuum, and function outside of economic incentives and rules.

      Toad, you truly are exceptionally stupid, and economically ignorant.

      • So why is it you question me and my motives but not my numbers?
        You think by changing the subject people won’t see which side is being dishonest, trying to make a political point by seizing on a problem that has been with us since 1970?

        • Both your motives and numbers suck. I question both. You made the stupid statement Toad.

          Not all businesses will make changes to part time work, as noted in the Minneapolis Fed piece. Businesses will reduce coverage, as mine did.

          Further, not all businesses have made the change yet. Come talk to me in 2 years, when there are 10 million part-time workers, and 16% unemployment.

          Your numbers are complete bullshit, just like you.

          • The question before us is whether or not this is the obamacare jobs report. The answer is hell no. Might as well call it the sunspot jobs report.

          • There, I kind of agree – employment will continue to deteriorate because of Obamascare and other effects of Obama’s piss poor economic policy.

            That isn’t reflected in this report.

            If we had a somewhat rational administration in office, I would have put a challenge out there for you, something like I would bet you any amount you wished that GDP will come in under 1.5% this year, which it will, but due to the upcoming GDP composition change/shenanigans, that likely won’t be the case. It will be inflated to look far better than it actually is.

          • Mesa,

            “Not all businesses will make changes to part time work, as noted in the Minneapolis Fed piece. Businesses will reduce coverage, as mine did.”

            My wife’s employer announced a couple weeks ago that a shittier coverage plan was on the way.

            I seem to remember lots of guarantees from Obama about “bending the cost curve down” and “if you like your plan you can keep it.”

            Maybe it was my imagination. I wonder if Toad heard those same promises.

        • Todd:

          There are numbers and there are numbers. The key number on employment is the percentage of the workforce which is employed. That number was around 65% before Obama took office. It is about 58% now. The difference of 7%, multiplied by the number in the workforce, which has grown since 2009, is the number of jobs that have “gone missing”. The 7.5% number is completely useless as it excludes those who have given up looking. So, I don’t dispute your numbers, they are simply irrelevant.

    • Toad,

      Like Mesa said, let’s revisit this. I have a condo I rent to two waitresses who both told me they are hearing rumblings of this at work. There are two personal anecdotes besides the endless news stories of other franchises like Papa John’s, Wendy’s, and Regal Theatres
      cutting hours.

      “No doubt some employers will deny workers something they want (healthcare) by taking something else away (hours) but that may be overly exploitative even by mesa and paul standards.”

      Exploitative my ass, it’s simple economics. You leftists raised the price of labor via Obamacare. What happens next in any econ 101 model, Todd? The workers at the lower end you claim to be so torn up over are going to end up screwed the worst because they are a)younger and relatively healthy, but forced into participating in the skyrocketing comprehensive health care plans, and b) having their hours cut. And when it all starts to collapse, guaranteed you will be there ringing the bell for even more expansive government to fuck it up even worse.

      Darn, simple logic is so mean!

    • “The trouble with dogma is that Paul is much more likely to believe his Pizza Hut “productive class” bud than the Minneapolis Fed.”

      I’m always amused by liberals like Todd and Larry who deny they are operating under any kind of dogma, yet never miss a beat in promoting government and the hucksters in D.C. who are busy growing it.

  5. Bastiat said. “The State is the great fictitious entity by which everyone expects to live at the expense of everyone else.”

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