Who Can Deny It? Obamacare Is Accelerating U.S. Towards A Part-Time Nation
Comment of the Day

August 07 2013

Commentary by Eoin Treacy

Who Can Deny It? Obamacare Is Accelerating U.S. Towards A Part-Time Nation

Thanks to a subscriber for this topical blog post from Forbes.com which may be of interest to subscribers. Here is a section
Ratio of New PT Workers to New FT Workers Explodes in 2013. For the most part, an examination of metrics measured in millions (e.g., involuntary PT workers or total PT workers) masks what is really going on. A much better sense is given by comparing the changes in PT employment to the changes in FT employment. Because the monthly Current Population Survey are so volatile, it is easier to see what is going on by calculating an average monthly figure for each calendar year to get a sense of whether the number of PT or FT is rising or falling. We only have six months of data for 2013, but this method allows us to compare the average monthly count for the year to date with the average monthly count from prior years on an apples-to-apples basis. We can then calculate the ratio of new PT workers in an average month to new FT workers in an average month. Obviously this ratio will turn negative in years that either FT or PT workers have declined on average. So over the past decade, there's only 4 other years with which to compare the 2013 experience.

Eoin Treacy's view The majority of US companies have been beating expectations during the current round of results. However, a closer look highlights the fact that many have been achieving this by continuing to cut costs rather than achieving outsized headline growth. Considering just how much of a burden health insurance is, not least as a percentage of total worker compensation, it is not an unrealistic hypothesis that companies are attempting to contain their liability.

The recent surge in part time workers may or may not be directly attributed to the Affordable Care Act but it is probably reflective of the way the labour market is evolving. Higher costs, regardless of whether they emanate from training, healthcare or pension costs, or as in this case regulatory change, are all challenges for management. The most rational way to deal with these issues is to ensure the most possible productivity for hours worked. Where possible, people are being replaced by machines. In a regulatory environment where it is cheaper to hire more part time workers than full time, we can expect companies to exploit the arbitrage. In the current environment, it is reasonable to expect the growth of part time jobs to persist.

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