Part-time employment and Obamacare

I’m old enough to remember when the monthly jobs report from the Bureau of Labor Statistics (BLS) was a “stop what you’re doing” breaking news development. Of course the political implications of each release is virtually non-existent now and coverage primarily consists of reading the headline numbers. To be sure, the headline numbers are good; we added 165,000 jobs in the month of June, though the unemployment rate remains at 7.6 percent. As in previous reports the numbers for the last two months were revised upward; a combined increase of 70,000 for April and June.

Some other quick looks, taken straight from the BLS summary:

  • In June, the number of long-term unemployed (those jobless for 27 weeks
    or more) was essentially unchanged at 4.3 million. These individuals
    accounted for 36.7 percent of the unemployed. Over the past 12 months,
    the number of long-term unemployed has declined by 1.0 million. (See
    table A-12.)
  • The civilian labor force participation rate, at 63.5 percent, and the
    employment-population ratio, at 58.7 percent, changed little in June.
    Over the year, the labor force participation rate is down by 0.3
    percentage point.
  • Federal government employment continued to trend down in June (-5,000)
    and has declined by 65,000 over the past 12 months.
  • Leisure and hospitality added 75,000 jobs in June. Monthly job growth
    in this industry has averaged 55,000 thus far in 2013, almost twice
    the average gain of 30,000 per month in 2012. Within leisure and
    hospitality, employment in food services and drinking places continued
    to expand, increasing by 52,000 in June. Employment in the amusements,
    gambling, and recreation industry also continued to trend up in June
    (+19,000).
  • The number of persons employed part time for economic reasons (sometimes
    referred to as involuntary part-time workers) increased by 322,000 to 8.2
    million in June. These individuals were working part time because their
    hours had been cut back or because they were unable to find a full-time
    job.

It’s those two last parts, especially the increase in “involuntary part-time workers,” that has raised speculation from some on the possible effects from the Affordable Care Act’s employer mandate provision. As a reminder, the ACA is set to penalize employers who offer no health insurance with more than 50 full-time employees. Full-time, as it’s written in the law, is set at 30 hours per week. Given the substantial increase in part-time employment from June could there be a connection?

Possible, but doubtful, would be my best guess. I’ve been waiting for someone with more expertise to put forward a case in favor (or not) of the causal evidence. As of this writing the only thing I can find is this in the NYTimes, from Anne Lowrey, who writes:

The June jobs report saw a surge in part-time workers, and the health care law that starts coming into full effect next year might be in part responsible. The number of part-time workers for economic reasons climbed to 8.2 million in June from 7.6 million in March.

But the evidence she links to is a Casey Mulligan post that posits (entirely reasonably) that incentives exist for employers to hire part-time workers. Fair enough, thought that’s just a supposition that such incentives exist for which I don’t think anyone would argue against. The obvious response is that there are other incentives that might or might not counter-act that and it doesn’t really tell me whether or not BLS data is empirical evidence of the ACA’s employment effects. As of this writing I don’t see any other pieces so this will just be me sort of chewing the mental cud.

Causal claims first rest on the involuntary underemployed data, specifically the increase for economic reasons. Now they include seasonally-adjusted numbers, which is what I’ll be referring to, that should exclude the normal employment changes typical of the summer season. So the BLS defines these folks as those “who worked 1 to 34 hours during the reference week for an economic reason such as slack work or unfavorable business conditions, inability to find full-time work, or seasonal declines in demand.” For the month of June in nonagricultural industries the number of those who were part time for economic reasons due to “slack work or business conditions” rose from 4.7 million to 5.1, whereas those unable to find full-time work slightly decreased from 2.686 to 2.632 million. Furthermore, the numbers for both are still less than June 2012. One issue with extracting causality from the former is that slack work or business conditions could mean many, many, many things. The employer mandate in the ACA could very well be one of those “business conditions,” but absent any other evidence it’s just speculation. Another would be, as Adrianna McIntyre mentions, that the BLS has a different measurement for part time (<35) than the ACA (<30). How one would reconcile that type of difference and be able to extract any useful interpretation for this subject? I don’t know.

Another way to derive some connection would be to look at likely affected industries. In this case it was the hospitality and leisure sector that popped up in my Twitter feed as a possible effect of the employer mandate:

I responded to him on Twitter and received some helpful clarification. Unfortunately I don’t have time to put that quick conversation in a convenient format (alternatively, just visit my mentions). To my mind there’s an implied counter-factual of job growth in that sector being full-time absent the employer mandate. Yet the average weekly hours from that sector hasn’t particularly changed since at least 2006 (see historical table here). Mr. Bronars helpfully added that such hours are indeed the norm for that industry. However, his argument seemed to be that the sheer growth of that sector may reflect economic activity diverted from full-time employment due to the ACA. I think that’s off-base, but then Reihan Salam offered the better explanation:

ReihanHelpful, yet, again just a logical supposition. Don’t misunderstand me as saying there is or will be zero employment effects from the employer mandate. There’s certainly enough anecdotal evidence for that, but on the question of whether anything in the BLS could be construed as measuring a causal connection I remain unconvinced. Of course I’m just some dude in a small Midwestern town reading data and doubting my betters. I’m certainly not discounting the idea that I’m completely missing something here, but if I am then what is it?

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5 responses to “Part-time employment and Obamacare

  1. Pingback: Firm incentives in an Obamacare world | The McLean Parlor·

  2. Pingback: Firm incentives in an Obamacare world | Punditocracy·

  3. Pingback: It’s the average weekly hours worked, stupid | The McLean Parlor·

  4. Pingback: It’s the average weekly hours worked, stupid | Punditocracy·

  5. Pingback: The long-term perspective on Obamacare and employment | Punditocracy·

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