Economics, Health Care, Pethokoukis

Are Obamacare opponents wrong about its impact on the US labor market — or just early?


Are opponents of President Obama’s healthcare reform plan mistaken about its current impact on the US job market? Are companies cutting hours and only offering part-time jobs in response to the delayed employer mandate? Some data to consider:

1. Consulting firm RDQ Economics digs into today’s ADP employment report — which suggests 176,000 net new private sector jobs were created in August — and finds “no evidence that the anticipation of the implementation of Obamacare has slowed employment growth relative to the recent past.” The closer implementation gets, the greater the impact, right? But that is not what the ADP numbers show. RDQ:

 Small companies with employees numbering 20 to 49 (just under the cap), employment growth has averaged 31,000 per month over the last three months versus 25,000 in the three months ended May.  Employment growth in medium-sized companies (50 to 499 employees) has averaged 66,000 over the last three months versus 34,000 in the three months ended in May.

2. But what about most of the net increase in jobs so far in 2013 being part-time positions? That’s got to be firms trying to avoid the employer mandate.

Maybe not. See, US employment data comes from two surveys. The payroll survey, the one that produces the monthly headline job numbers, is based on responses from a sample of about 400,000 businesses. The household survey, which generates the monthly unemployment rate, is based on responses from interviews with approximately 60,000 households. It also produces the part-time jobs data. The problem here is that the small sample makes the household survey exceptionally volatile. First Trust economists Brian Wesbury and Robert of Stein :

It is true that using the civilian employment survey most of the net increase in jobs so far in 2013 has been part-time jobs, 71% to be exact. But, again, that survey is very volatile for periods shorter than a year and this is one of those cases. Notice how random it is to use year-to-date, which means just the past seven months.

It just so happens that part-time jobs plummeted late last year even as total jobs kept rising, so using the year-to-date figures artificially ignores those numbers from late 2012. Looking back over the past twelve months, total civilian employment is up 2.035 million while part-timers are up 282,000, or 14% of the job gains.

3. Blame the slow economy, not Obamacare for the rise in part-time jobs say researchers Rob Valletta and Leila Bengali of the San Francisco Fed:

Part-time work spiked during the recent recession and has stayed stubbornly high, raising concerns that elevated part-time employment represents a “new normal” in the labor market. However, recent movements and current levels of part-time work are largely within historical norms, despite increases for selected demographic groups, such as prime-age workers with a high-school degree or less. In that respect, the continued high incidence of part-time work likely reflects a slow labor market recovery and does not portend permanent changes in the proportion of part-time jobs.

4. The economic team Goldman Sachs looked at the data and found that while “it is possible that the trends over the last few months might reflect the approaching onset of the now-delayed employer mandate, it is also important to note that the shift toward part-time labor pre-dates enactment of the health law and is much more clearly associated with the economic downturn.”


5. But what about all those report of employers limiting workers to fewer than 30 hours per week? Jed Graham of Investor’s Business Daily has found more than 250 such examples (see below chart):



Almost all of those employers have cut the hours of part-time workers to below 30 per week — the point at which ObamaCare’s insurance mandate kicks in.

A few have cut payrolls to steer clear of ObamaCare’s 50 full-time-equivalent-worker definition of a large employer subject to employer fines. A few others have reduced staff while contracting with employment services firms to limit their ObamaCare exposure.

The bottom line, at this point, is that we don’t have solid, reliable data on the real-time impact of healthcare reform on the labor market. But I think economists would be surprised if Obamacare didn’t nudge up part-time work to some extent. Even the SF Fed study points to research that suggests “the ultimate increase in the incidence of part-time work when the ACA provisions are fully implemented is likely to be small, on the order of a 1 to 2 percentage point increase or less.”

I don’t find that increase to be particularly small, but your mileage may vary. I think at this point it best serves the debate to keep claims limited as more research and analysis flows in.

18 thoughts on “Are Obamacare opponents wrong about its impact on the US labor market — or just early?

  1. The employer mandate is not being enforced in 2014. What we have is a conjecture on a conjecture. Conjecture one: The mandate is being enforced(false conjecture). Conjecture two: In anticipation of false conjecture one, hiring will be impacted in some way. Really?

  2. What happened? Is Obamacare repealed?

    Part-time for economic reasons employment declined by 315,000 jobs in August. Back to the drawing board!

  3. Still nothing about federal furloughs gumming up the recent part-time numbers? :-)

    See Furman, chart 5.

    Drawing board re-reversed! I have no idea whether Obamacare has anything to do with the part-time data this year, but nothing in the data jumps out.

    • Again, no.

      Chart 1 – notice job creation flatlining after the passage of Obamascare (March 2010).

      You’d better get more lipstick for your pig, marmy.

  4. Chart 1 – notice job creation flatlining after the passage of Obamascare (March 2010).

    Yes. But job growth flatlines above the zero mark in all expansions.

    FRED Graph

    When are you going to bring some empiricism to the table, pinhead?

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