Economists are slowly, belatedly noticing how Obamacare will shift the U.S. labor force toward part-time work, something I have been writing about for a few years. The obvious avenue is the 50/30 rule–employers must provide insurance if they employ 50 or more “full-time” (more than 30 hours per week) workers. This has two effects. Small businesses may try to stay small by having fewer than 50 workers, and big companies will try to minimize the number of full-time workers by keeping employees‘ hours per week to less than 30.
A slightly less obvious path to a part-time workforce was highlighted in this week’s Barrons by the always interesting Gene Epstein. In an article titled “The New Tilt Toward Part-Time,” Epstein cites a study by Casey Mulligan of the University of Chicago, who argues that Obamacare will encourage part-time employment because part-time workers can get as much as $17,000 per year in Obamacare subsidies. In the old days people worked full-time in order to “get the benefits.” That is no longer necessary. I can work part-time, have more leisure, spend less money on work expenses and child-care, and get heavily subsidized benefits from Uncle Sam.
What are the implications of a part-time American? It will make for a less dynamic economy because people will work less; the U.S. will be more like France or Italy and less like the U.S. of the 1990s. In the current period of high unemployment this may not seem important, but in the long run it will matter because labor force growth is set to slow dramatically as baby boomers retire. Obamacare will make the slowdown in hours worked even more pronounced. (Enlightened immigration policies that attract well-qualified workers would alleviate this problem.)
Second, there will be greater inequality as we develop even more of a “two tier” workforce. At the top will be highly educated go-getters who are still working sixty hours per week, getting decent salaries and benefits, and accumulating capital that generates investment income. But there will be many more people working part-time, with comparatively low incomes but quite a bit of leisure time. Call them the comfortably impecunious.
A third impact will be reduced social mobility; poor people will be more likely to stay poor because they cannot get full-time jobs and move up in the organization. When I was in college more than a few years ago I travelled to the West Coast one summer to stay with a relative in a bungalow on LA’s Venice Beach. After just a few difficult days I get a decent job at a Bob’s Big Boy working as a cook eight hours per day, six days a week, at a fair starting wage ($2.50 per hour plus unlimited Big Boy Double-Deck Cheeseburgers). Starting in 2015 (Obama granted himself a waver until after the 2014 election), that may be impossible; to get 48 hours you will need to shuttle between two jobs, wasting time and money in the process.
A more subtle barrier to social mobility is that low-status hourly employees who work less than 30 hours per week will have a hard time moving up in the organization. If they get a promotion to a more responsible, full-time job, their cost to the employer will jump because he or she will be obliged to provide Obama-style gold-plated health insurance.
When Obama was campaigning for the Presidency, a conservative joked that his campaign slogan should be, “Together, we can become France.” Alas, that was prophetic. By the way, French unemployment averaged 8.9% over the past decade; the lowest annual figure was 7.4%.
Copyright Thomas Doerflinger 2013. All Rights Reseerved.
