Media Starts To Discover Part-Time Fiasco

Last year I said that the biggest economic story of 2013 would be the conversion of the American service worker to part-time from full-time in order to manage the new costs imposed by the PPACA.  This has already been going on in restaurants and hotels for months, but no one seems to notice.  Ironically, it is only starting to become news when it hits university professors.

  • Horace

    Sooner rather than later, there will be law suits demanding over time after 30 hours based on the Obamacare standard.

  • bigmaq1980

    Not "main stream" enough...that is the WSJ.

    Let's see when it hits one of the big networks or big circulation metropolitan newspapers (and not buried deep inside).

  • morganovich

    given how intensely university professors supported this plan, this could not happen to a more deserving bunch of folks (except maybe congress).

  • bigmaq1980

    I thought that Ocare may change the law to a lower hours per week threshold, or may change to a combination weekly hours, annual hours, and total months threshold - making it unavoidable to the employer - perhaps forcing layoffs. What we are seeing is a real-time experiment of something similar to the "minimum wage" laws (which is much less visible to see and prove the effects of), but with similar effects.

    This is just one of many "unintended consequences". The perverse effect is opposite what they intended. The "poor" who could not afford healthcare premiums before, now earn less, becoming "poorer" making them less able to afford healthcare. The amount they may have "saved" with their ability to "buy" hc from the government is probably more than lost on their reduced income.

  • marque2

    Not only are they less able to afford the healthcare, there is a $2000 penalty for not getting it. I suppose they will have to enact programs to give it away for free for those not earning enough.

  • Brad Richards

    These are not the professors, these are the adjuncts. The people who do most of the actual teaching in most universities, often with lousy pay, no job security and few if any benefits. Most universities seem to have forgotten that teaching is actually their primary mission; too many professors do the absolute minimum amount of teaching they can get away with.

  • sean2829

    Adjunct Professors in higher education are what overseas outsourcing is to manufacturing. The full professors average more than $120K per year and the adjuncts around $40K per year. Think through beyond the opening gambit of cutting adjuncts hours. If the 30 hour health insurance threshold is reduced, expect to see more automation such as classes on the internet where the lecture can be downloaded or viewed at any time and the quizes to track progress and ability are also computer based interactive lessons. Alternatively (or perhaps in combination with automation), your interactive small classroom lecture will be done via Skype and now the adjuncts can be offshore or subcontracted to a completely separate company here in the US or in Canada, the UK, Austrailia, India, etc.. Sounds a lot like how Washington DC works where the gap between the rich and poor has grown larger than anywhere else in the country as more of the country's wealth is channeled through the halls of congress.

  • marque2

    True, but I wouldn't be surprised if the Adjuncts also voted overwhelmingly for Obama twice now, even after knowing what Obamacare would do.

  • marque2

    I don't know, the Adjuncts aren't being paid peanuts. At UCLA they get about 100K a year. check out this article. If you are an adjunct at a decent University the pay still seems fairly sweet.

    http://www.ehow.com/info_8583131_average-adjunct-professor-salary.html

    And if you aren't good enough to get into a decent University, your pay should be commensurably less.

  • MingoV

    I read something interesting about this (I think at Megan McArdle's site). There are rumors that the IRS, unhappy with the predictable effects of ObamaCare on working hours, is considering a novel way of counting full time employees: adding total weekly work hours of part time employees and dividing by 30. Thus, an employer with 100 workers who work 21 hours a week would be considered to have 70 full-time employees (instead of 0). It seems outrageous, but then so was the claim that a penalty for not buying insurance is a tax.

  • bigmaq1980

    Very true.

  • bigmaq1980

    Ahh, should have thought of that...we called the FTEs (Full Time Equivalents) as a means to measure headcount over a long term project where there are many "part time" participants.

    I have no doubt that there will be adjustments like these to squeeze employers into compliance one way or another.

  • http://matthewjudebrown.com/ Morven

    I already thought there were such programs in Obamacare -- certainly subsidies.

    Politicians of all stripes have the problem of never anticipating consequences -- sometimes they think a step or two down the chain of consequences but don't go all the way. This is partly, of course, because thinking too far would tell them that their plans won't work, and politicians aren't really about things that work long-term, they're about stuff that sounds good RIGHT NOW to get them elected.

  • LarryGross

    I swear, it seems that when some want to believe something nothing will deter them from that INCLUDING the realities.

    FTE - Full Time Equivalents guys:

    " The employer shared responsibility provisions, contained in section 4980H of the Internal Revenue Code (Code), provide that an applicable large employer (for this purpose, an employer with 50 or more full-time equivalent employees) could be subject to an assessable payment if any full-time employee is certified to receive an applicable premium tax credit or cost-sharing reduction payment."

    http://www.dol.gov/ebsa/newsroom/tr12-01.html

    it's pretty bad when the right wing echo chamber blathers over and over - to itself - whatever it is they prefer to believe even when the facts are easily verifiable. This full time equivalent verbiage was in there - from the very beginning but the "rumor" went on regardless....

    but really - what difference would this make anyhow if an employer - for whatever reason - does not offer health insurance to their employees - the ACA health exchanges WILL - and for many people who work at jobs
    where employer-provide health care is non-existent or minimal - what the ACA does is provide minimum basic insurance - that is PORTABLE which means people are no longer tied to one employer and can make choices about where they want to work - based on things OTHER than employer-provided health care.

    My view is that THIS aspect is WHY many businesses are opposed to the ACA. It's a direct threat to their ability to affect employees ability to be job mobile.

    With the ACA portability, workers will have more options about where to work - how many jobs to work if part time and when to bail on a bad employer and move up to a better one - without regard to health insurance.

    The ACA will benefit workers and put pressure on employers to better treat workers or else they'll simply go elsewhere.

  • slocum

    I don't see how this refutes the point "an employer with 50 or more full-time equivalent employees) could be subject to an assessable payment if any full-time employee is certified to receive an applicable premium tax credit or cost-sharing reduction payment." So it seems that all the employer with more than 50 FTEs has to do to avoid the problem (and what they actually seem to be doing) is make sure that it has zero *full-time* employees who are eligible for the premium tax credit. Isn't that exactly what we're talking about--namely making sure that all low-paid employees (whose pay would be low enough to qualify for a subsidy ) are permitted to work part time only?

  • LarryGross

    there's more to it than that:

    http://www.irs.gov/irb/2011-21_IRB/ar07.html#d0e192

    go to FTEs

  • slocum

    Sorry, I still don't see it -- you've linked to more rules about determining whether a business is an 'Applicable Large Employer'. I don't question that a business with, say, 20 full-time employees and 200 part-timers would be considered a 'large employer'. What I'm questioning is what happens if such an employer makes sure it has no low-paid full time employees (all 20 full time employees have employer-provided insurance while the 200 low-paid employees are all part-timers with no coverage). It appears to me that such a business has no ACA liability for the 200 part-timers. This, for example, seems consistent with that interpretation:

    "Although part-time employees’ hours count toward determining whether the 50 FTE threshold is satisfied, covered employers will not be required to offer coverage to their part-time employees."

    http://www.laboremploymentperspectives.com/2012/12/17/affordable-care-act-start-your-fte-countdown-now/

  • Username456

    I for one welcome our robot workers.

  • LarryGross

    It appears to me that the IRS has the authority to promulgate the regulations in accordance with the intent of the law.

    That leads me to believe that the IRS is likely to see loopholes and adjust the regs accordingly.

    no?

  • slocum

    But the lack of a requirement to provide coverage (or pay a penalty) for part-time employees is a deliberate feature of the law -- it's not a inadvertent 'loophole'. In any case, you do concede that, in its current form, the ACA does create a strong incentive for large employers to move low paid employees to part-time status, correct? (And that it's not just 'right wing echo chamber blather'?)

    Also ask yourself what might happen if 'Applicable Large Employers' were required to pay a penalty for part-timers, what would happen then? Answer -- service industries (restaurants, motels, etc) would see a shift to 'small employers' -- either independent or using the franchise model. Or a given owner might set up several independent businesses, all staying under the limit. Like this:

    http://www.businessweek.com/articles/2012-05-03/why-france-has-so-many-49-employee-companies

  • http://profiles.google.com/maruadventurer john mcginnis

    You miss the most glaring difference -- if the employer arranges his affairs so that he has no responsibility, the cost of the PACA insurance premiums fall 100% on the employee. You say, well that is what it is now. Wrong. What it was before PACA is the employee could opt to not have insurance at all. Now they are required to and its not cheap. For someone earning $400/week and barely scraping by dumping an extra $250-300/mo cost on top of that busts their budget.

  • LarryGross

    re: deliberate feature... are you really sure that was the actual intent of the law?

    re: incentives, disincentives, et al. Every new law and regulation ends up with unintended consequences that often have to be tweaked.

    for instance, we talk about tax law and loopholes all the time and yet we never say that tax law is doomed to fail.

    When Medicare Part C and D where enacted, they did not forsee some unintended consequences and subsequently had to circle back to deal with them and yet few people other
    than the hard right advocates killing Medicare all together because of such "flaws" or getting rid of taxes all together because there are "loopholes".

    this is a problem with folks who oppose things. They're really not interested in correcting.. they use such things as rationale for doing away with it all together.

    And that's what this thing about the ACA is really about. It's yet another tome from the right about ... how you cannot right a law that people won't figure out how to get around - as if passing laws in and of itself was futile endeavor.

    it's just blather. If the IRS can't figure out how to regulate it - it will come back to Congress and if Congress gridlocks changes to it - they risk getting thrown out at the next election.

    There are going to be many, many more people beyond the 50% that support the ACA right now that end up benefiting from it - as I alluded earlier - portability for job mobility. As more and more people see how this actually benefits them and empowers them to find better jobs and not be restricted to only those that provide employer-provided health care the game is going to change and people are going to support the ACA even if they opposed it earlier.

    you can count on it.

  • LarryGross

    " For someone earning $400/week and barely scraping by dumping an extra $250-300/mo cost on top of that busts their budget."

    you need to go to healthcare.gov and go through the menus - where you'll find that for many low-income scenarios there are minimal catastrophic plans for less than $100 a month - all being offered by private companies - and portable so you can take it with you no matter what job you go to next.

    I would assert that when an employer knows that a good employee has such an option, it's going to change their calculation from a pure one about evading the intent of the law.

    Employers want good employees. Good employees up until now had damn few options for health insurance at many employers. Now they do and it's going to change the equation in ways different than some think.

  • http://profiles.google.com/maruadventurer john mcginnis

    Pull back a bit and look at the haystack and not the needle. Specifically how does PACA damage the practical implementation of any proposed immigration reform? The fact is the following are going to happen --

    * Employers are going to be loathe to put someone on the books who has been hiding in the shadows. Especially if they are close to any PACA triggers. Its going to be a `who are you again?` kind of event.
    * Those that are in the shadows won't be able to afford the premiums so they will have no incentive to come clean.

    PACA reinforces the status quo regardless if a law is passed or not.

  • http://profiles.google.com/maruadventurer john mcginnis

    minimal catastrophic plans for less than $100 a month

    I don't think you understand just how tenuous the lifeline for some people are. For some even $100 will sink them. I hear way too many people grumbling that the FICA holiday expired. As to the good employee argument, it won't matter. We were headed to Contractor Nation even without PACA. PACA just reinforces that trend. Being a full time W2 employee is fading away.

  • LarryGross

    have you gone to healthcare.gov yet? for those below certain income levels, there are subsidies. re: FICA, contractors... Have you seen a 1099 for a contractor employee? Have you seen a 1040 for FICA contributions from self-employed and contract employees?

    http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Defined

  • marque2

    I hope there are some provisions - wouldn't want all the homeless people to be jailed for tax evasion.

  • http://profiles.google.com/maruadventurer john mcginnis

    Better start reading the fine print Larry. As a case in point, since you are hanging your hat on the subsidies in our discussion. --

    "An amendment to an early draft of PPACA gave states the flexibility to
    elect not to establish an Exchange, providing for a federally-run
    Exchange in states electing to opt out.5
    However, there is no parallel amendment to the tax credit provision.
    That is, subsidies for state residents are only available if the state
    elects to create an Exchange, so lower-income individuals in opt-out
    states will not be eligible for the subsidies.6"
    http://www.americanbar.org/newsletter/publications/aba_health_esource_home/aba_health_law_esource_0912_sanders.html

    There are 33 States that have stated they WILL NOT set up a state exchange. Four states are still deciding. The rest will. So nearly 2/3rds of residents of this country will not be eligible for a subsidy. That is the current law and situation.

  • slocum

    And that's what this thing about the ACA is really about. It's yet another tome from the right about ... how you cannot right a law that people won't figure out how to get around - as if passing laws in and of itself was futile endeavor.

    Legislative attempts to, in effect, repeal the law of gravity are futile. Low-wage workers are not productive enough to pay for what the HHS will mandate as a 'minimally acceptable' health policy. No amount of tweaking of employer penalties and incentives can change this. If low-wage people are going to be covered with comprehensive (not bare-bones or catastrophic-only) health plans, it is going to be paid for by the government. That's the bottom line. BUT, it's entirely possible that attempts to tweak will cause quite a lot of harm in the interim. Damage such as...low-paid workers having their hours reduced and, as a result, having to try to juggle multiple part-time jobs. Or increasing unemployment among the low-skilled. Or some combination.

  • LarryGross

    did you read the part about what happens if the state does not set up an exchange?

    do you know the answer to that?

    why don't you find out for yourself by going to healthcare.gov and on the menu, put in one of the States that is not going to implement an exchange and see what options it presents to low-income folks?

    try it.

  • http://profiles.google.com/maruadventurer john mcginnis

    I don't have to go to ******.gov. Its in the law as passed Larry.

  • LarryGross

    all I am saying to you is that no matter what you think the law says (or not) - go to healthcare.gov and look at what is available to people - under the law.

    it's easy for anyone to look at the law and think they know what it means but go to where the law actually is implemented in these Federally-run exchanges for the states that chose not to set up their own - and you will see that people have options with the Federally-set-up exchanges.

    If you were not such a rah rah rooter of the PACA demise..you might realize that the law might not be what you think.

    all I'm asking is that you do go there for one of the states that did not set up exchanges and see what is available...

  • bigmaq1980
  • bigmaq1980
  • NormD

    "My view is that THIS aspect is WHY many businesses are opposed to the ACA. It's a direct threat to their ability to affect employees ability to be job mobile."

    What a bizarre comment.

    The idea that a McDonald's owner is saying to himself "Ha, the guy who makes French Fries is stuck here for life because I offer him health insurance" is beyond laughable.

    Have you actually employed someone???

    "The "Right" that has campaigned for years to eliminate the health care tax deduction for businesses and allow people to contract for their own portable health plans. Most business leaders would jump at the chance to be done with this headache.

    Everything the Left does is designed to favor big business. Only big business can afford to employ the functionaries needed to understand the gobbledygook the government issues.

  • LarryGross

    different employers have different ideas about providing health insurance or not but people who need it - do search for employers that have some level of it and that does affect the job market and if McDonald and Walmart truly believed it did not matter - neither would offer it at all no matter what.

    As a matter of fact, I did sit on a board of a non-profit when we were looking at candidates and our top candidate totally insisted on a health care package for his family before he would commit to the job.

    so it does matter.

    if employers want out of the health insurance business - and can do so with a piddling fine, I suspect they will bail indeed - and that people will then go to the health care exchanges to get truly portable insurance which would allow them to look for work - no matter what health insurance benefits were offered or not.

    I think you really underestimate this. Only time will tell but portable health insurance is a big change.

    Our local schools "self-insures" and has a relatively small pool compared to a statewide pool and they've been affected by higher costs. The problem is that people cannot bail out and find something else because they don't get the money that is spent on their health insurance.

    this is going to change. People should have more choice than just what their employer offers.

    and under the ACA, they will ... and it's going to cause big changes for employers.

  • bigmaq1980

    If your point is that the current situation causes employees to be tied to their current jobs, making it difficult to change employers, I agree, and agree that it should be changed. This could greatly help entrepreneurs who would otherwise have to rely on the individual market during their start-up phase.

    Is Ocare the right way to go about it? I don't think so. That just replaces one market distortion with another, and I think you will find plenty to argue about regarding the effects on the economy and on the quality/quantity of medical care long term. There are issues unique to medical insurance to be sure, but not enough to justify a massive program like this.

    Employers would rather not "provide" (actually, to be correct, they subsidize it, as I know of few that actually provide it "free" to the employees) medical insurance. If they want to incent employees to stay, there are many things they can do (e.g. vesting bonuses). They provide it largely because the market is imbalanced towards employers providing it. This is not unlike car ownership in Germany - majority are sold to the employers, and for very similar economic/tax reasons.

    Companies that are at the policy threshold boundaries will arrange their affairs in whatever way they can to minimize the impact. If they cannot manipulate their FTEs, then they will start hiring "contractors".

    The reduction in hours for part time workers is just one of MANY unintended consequences of a large, complex, far reaching law. Expect more fallout to come.

  • LarryGross

    I would agree that it's hard to discern on the front what the impacts will be and anyone can and many are dreaming up all sorts of plausible bad outcomes... which may or may not turn out.

    I've always wondered myself what the rationale is for the Feds to require you to accumulate more than 7.5% of your AGI before you can deduct health care costs.

    I've also wondered why if employers "subsidize" health insurance, why someone cannot opt out and ge the money instead and go shopping for their own.

    Both of these are govt 'distortions" right?

  • madpapagrizzly

    forget about working overtime for those who might have been a great worker. Workers will have to get two part time jobs. Just anecdotal reasons to see reasons for being pissed off about this thing and its not even in effect yet. Its either that or become an independent contractor. People are already poed about the return to normal SSecurity deductions. Now young people have to pay when the could have opted out altogether and pay as you go. Will anyone be able to find a Dr if everyone thinks its "free" healthcare? Its a free for all for lawyers to leach off of Doctors as well since there isn't any tort reform in the bill.

  • sean2829

    That's not a time bomb it's an auto destruct mechanism. Remember, Harry Reid told his supporters who were unhappy that the bill did not go nearly far enough toward a single payer system let essentially told them be patient.

  • papagrizzly

    so have you done anything "for profit"?

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Obamascare is designed to fail. There is zero way to prevent it, as all incentives are misaligned, from providers to consumers.

    As many have already observed, the goal is single payer, which is what Obamascare 2.0 will devolve to – provided the country lasts that long.

  • bigmaq1980

    I see your and mesaeconoguy's points: If/when there is a "market failure", there will be a push to "do something about it".

    If the GOP were not so poor strategically, I'd disagree the result is pre-destined (pre-planned, yes).

    For Reid to work that gambit, the Dems would need a majority in the three bodies of government. I'm not confident today that 2014 mid-terms looks good for the GOP.

  • nehemiah

    As for the media taking notice, the election is over, DUH

  • nehemiah

    Nonsense

    If it were that easy to find a different job why have so many given up? Businesses are opposed to the ACA because it will cost more or force them to make changes in how they resource labor. Citizens will become increasingly opposed as it costs them more and service delivery becomes constrained.

    You wouldn't happen to be an academic would you, Larry?

  • nehemiah

    Yes they are gov't distortions. By making the employer's contribution deductible and treating the employee's share pre-tax you are driving a behavior. Tax minimization and avoidance strategies play off the tax code.

    The 7.5% AGI threshold you note is another example. Rather than not be able to deduct those expenses I take my employer's plan and pay with pre-tax dollars.

  • LarryGross

    any idea what the govt's rationale is for the 7.5%? It seems to be punitive to those who would use their own money to pay for health care.

    Why should people who get employer-provided health care - get it tax free and people who don't have to pay taxes on health care expenditures? What the rationale for that?

    Oh and I do agree, it DOES drive behaviors.

  • jhertzli

    Before a regulation is passed: Businesses won't react to this.

    After the regulation is passed: Businesses are horribly evil for reacting to this and must be punished with more regulation.