It’s the average weekly hours worked, stupid


Via Wikimedia Commons

Just a quick revisit today on the issue of the Affordable Care Act and part-time employment. When the Bureau of Labor Statistics monthly jobs report for June was released I questioned the validity of attributing the rise in part-time employment to the health reform law. In particular some claimed that the growth in involuntary underemployment due to “economic reasons” was clear causal evidence that the employer mandate in the ACA is the culprit — data that supports the plethora of anecdotes coming from business owners.

A couple of days ago the Wall Street Journal had a news piece providing several examples of the latter and absolutely none of the former.

Really. The best they could do was, well, this:

“I’d be surprised if the Affordable Care Act didn’t have something to do with” the pickup in part-time hiring, said Paul Dales, senior U.S. economist at Capital Economics. “Companies don’t want to pay for health care unnecessarily if they can avoid it, so they’ll try to avoid it.” However, he said “the effects will be harder to discern in the data.”

To be absolutely clear here, this is not data. Or proof. Or evidence. What it is something actually worse; conjecture from an economist.

His assessment is based on an appeal to one incentive facing employers of low-wage workers. My original objection to this notion wasn’t that such an incentive doesn’t exist, but that any macro-employment data would be able to pinpoint the effects of the ACA’s employer mandate. However, the likely intended audience for a WSJ article on employers hiring part-timers to avoid having to provide health insurance (or pay a penalty) is sort of given permission to assume the economist’s gut-guess is essentially correct.

Much to the WSJ’s credit they did get someone else to comment on whether the ample anecdotal evidence is showing up in the overall employment numbers. The answer is no:

Ethan Harris of Bank of America Merrill Lynch is skeptical that health-care-related hiring by restaurants affected the overall jobs numbers. “Some companies have started this spring to redesign their workforce to keep people” beneath 30 hours a week, he said, “but it should be reflected in the average work week…and it is just not showing up in the data.”

I don’t know if Harris is an economist, but in truth that doesn’t particularly matter. The numbers are what they are, and in totality tends to tell a story that downplays the scale of this phenomenon so many assume is (recently) rampant in the industry. In fact, the increase in part-time employment for economic reasons happened before the employer mandate ever appeared on a draft piece of legislation:


Hat-tip to Matt Yglesias over at Slate for bringing up the above trend. If you want a more entertaining version of this graph, go see his, but the point (made by Matt) is that the above picture is primarily a story of the economy. Specifically, a tale of demand shortfall in the economy.

Of course that’s a story of all industries. The occupation mostly being discussed, in the WSJ article and elsewhere, is leisure and hospitality. So the point I’d like to reiterate here is what Harris mentions — that while part-time employment for economic reasons has increased the average hours worked in this sector has remained stable at approximately 25-26 hours:


Moreover, these hours have been stable irrespective of whether the employment level is positive or negative:

This industry as a whole, leisure and hospitality, seems to already operate on part-time employment below the mandate’s application. Once again, with feeling, I’ll just say that the implied counter-factual here (including within the anecdotes) is that if not for the employer mandate in the ACA we’d be seeing a surge in full-time, rather than part-time, work. However, to do so you should have to explain why the incentive structure low-wage employers are fearing in 2013 is producing the same aggregate hours worked as in…2006. Whatever the impetus for this industry to largely employ part-time workers at around 26 hours a week would, given the history, probably continue to exist with or without the mandate. Up to this point I have yet to see a compelling argument to convince me otherwise.

***Personal note: Vacation! I start tomorrow, through the 27th or so of this month. Expect little to no blogging (very likely the latter) until after that point.***

One response to “It’s the average weekly hours worked, stupid

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

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