Tuesday, July 8, 2014

On Armstrong & Getty, 7/8/14: PPACA Encourages Part Time Employment While Discouraging Full Time Work

This is the full third hour of the Armstrong and Getty Show from Today.  Our discussion begins at 7:40: 

June's addition of 28 documented examples of employers cutting work hours to dodge fines levied under ObamaCare's employer insurance mandate, IBD's list now includes 429 employers:
  • Among the new additions are 7 school districts, bringing the total to 130 districts where hours have been cut or permanent staff outsourced to avoid taking on new costs for employees who work at least 30 hours a week.   
  • IBD's list of ObamaCare job and hours cuts is dominated by public-sector employers, but that undoubtedly reflects their relative transparency about work policies, some of which come up for votes before school boards or county commissions. 
  • One way to test for an ObamaCare effect on the workweek — suggested by White House economists, no less — is to look at whether there is a shift in the ratio of workers clocking 31 to 34 hours per week compared to those working 25 to 29 hours. If that ratio were stable or rising, it would be a sign that ObamaCare wasn't affecting work hours in a meaningful way. But the data signal the opposite: The ratio has plunged to the lowest level in almost 14 years. 

University of Chicago Professor, Casey Mulligan: ACA to Reduce Employment by 3% on Average. (CBO had stated 1.5% to 2%). How will this happen?
  • People working 25-29 hours a week will have little to no (or maybe even negative) financial reward to work as moving across 30 hours could result in a loss of subsidy to them or in a fine to the employer. In econ jargon this means a marginal tax rate in excess of 100%. 
  • Workers putting in 30-35 hours a week now represent a different problem. By reducing them to 29 hours, the employer will save $3,000 or more on that worker. In theory they can share some of this with their workers. 3 million to 4 million are likely to be in this pot. 
  • 90% of workers earning less than 250% of the federal poverty (even if they work up to 40 hours a week) will be in a position whereby their loss of income to drop down to 29 hours a week will be more than made up by their increased subsidies they'd receive by dropping those hours. Another 4 million are in this pot). 
  • Hence the participation rate in the workforce (already the lowest in 40 years at 62.8%) is likely to drop by 3% more by 2016. 
  • This month's job report showed a seasonally-adjusted decline in full-time employment of 523,000. Part time employment increased by 840,000. 

Enrollment in Employment-based Health Plans is Declining About 6 Times Faster Than Government Projections Under Obamacare
  • CBO analysts predicted the number of people in group health plans would fall just 0.3 percent, or 500,000, this year. 
  • Actual group plan enrollment is down 2%, to 177 million in the first quarter of 2014, from 180 million a year earlier.