The Ignorance of Pundits

Brad DeLong writes

What are they thinking?

I mean, some employers are going to drop hours below 30 a week once the employer pay-or-play hits. But we won't see that until the February 2015 employment report, and there is no reason for employers to start that eighteen months in advance. It isn't there in the data. And nothing would lead anybody to expect that it would be visible in the data right now.

So why are they claiming that it is?

I am amazed at how even prominent pundits don't bother to educate themselves on even the most basic aspects of the policy issues they discuss.

Let's go back before the 1-year delay in the employer mandate, which was scheduled to take effect on Jan 1, 2014.  In the implementation rules, employees would be classified as part-time or full-time on Jan 1, 2014 based on a 3-12 month look back at actual hours worked in 2013.  That means that for many companies, such as ours, to have employees classified as part-time on day 1 of Obamacare, we had to have them working part time in January of 2013.  By the time the Obamacare employee mandate was delayed, we had already made changes in our operations, so we are not going back and will just maintain them until 2015.

So for our company, and likely for many others, the change to part-time showed up in the first quarter of 2013.

So why is DeLong claiming otherwise?

  • Pinebluff

    Because the big guy in the White House told him you don't know what you are talking about.

  • John O.

    Because its about "magic", lets delay the employer mandate for a year and pretend it went back to normal by saying it did.

  • Matthew Slyfield

    Because if they tell the lie often enough, it will magically become true.

  • steve

    This one is confusing to me. DeLong is a Democrat so his agenda should be something along the lines of its not going to get any worse or even it is going to get better. So, I would expect him to say the full force of the 30hr week has already hit, not that it will get worse in 2015.

  • Brad_DeLong

    I thought that at employers' option they could either (for administrative convenience) use the entire year or any six-month period in the year? Which would mean that you would have started cutting back in July--by which time the mandate had already been delayed for a year?

    Am I wrong?

  • Russ R.

    Right or wrong, kudos for responding in person.

  • Tanuki Man

    "Am I wrong." Yes. Usually. Perhaps not always but usually. Try being an economist first and a Democrat mouthpiece not at all.

  • mahtso

    I have no idea if you are wrong, and I suspect that many employers also do not know, in which case, the blogger's approach would make sense (as the safe way to proceed).

  • rst1317

    I don't know if you're right or wrong in terms of the law itself. And I may be missing something that's leading me to think this. Mr. DeLong seems to be assuming that all businesses will procrastinate on making employment decisions until they absolutely have to meet the guidelines for part time.

    While it's fair to assume they all wouldn't be in a hurry to rush out and make those changes, I would imagine a lot of managers realize making personnel changes takes time and carries risks. They'll need some time to get things sorted out. So I'd imagine regardless of exactly when the deadline was, many would making those changes in advance.

    Also, more important than what the law is would be how people thought it was at the time they made their decision.

  • pokeyblow

    I.e., the sort of people who are making these decisions can't be expected to know precisely what the law is, or how it works; only to bitch about it.

  • pokeyblow

    Apparently you have no response to DeLong's simple, direct question. Sad.

  • Guest

    Here's an insight for you: the industries where Obamacare matters (retail, etc.) didn't cover employee healthcare in the past because the cost to insure each employee frequently exceeds the per employee profit of the business. You can't pay a few thousands dollars per employee for healthcare if you only make a thousand dollars per employee profit. So, all employers will move employees to part time status to avoid this. It's a natural law, like gravity: people will not put themselves out of business. Employers will shift employees to fewer hours, or they will need to raise prices and will suffer from lower priced competitors that do. This will be bad for employees, who will now have to balance out their hours between the two part time jobs, and may have trouble commuting between them. It hurts in other ways like workplace camaraderie. But it definitely will happen in advance, since the businesses that don't plan in advance won't be in business soon.

  • Tanuki Man

    Question asked. Question answered. Why don't you moveon.org?

  • Rick C

    Anybody who disagrees with this should consider the yacht luxury tax. People swore up and down it wouldn't hurt the industry. What it actually did was kill it.

    The amazing thing is that with so many examples of this happening, more people haven't wised up to it yet.

  • mahtso

    Or they could ask Nancy Pelosi what is in the law. Maybe she knows now.

  • pokeyblow

    What are the odds on the original poster answering DeLong's question? In a more substantive way than you "answered," of course?

  • Rick Caird

    What are you talking about? DeLong wondered why hours were being reduced long before 2/2014. the answer was the look back period could be as early as 1/2013. So, the question was answered clearly and succinctly in the post. That is what Tanuki Man said.

    So, exactly what is confusing you?

  • Rick Caird

    Which is exactly why they over respond so as to avoid making an error. Government frequently punishes error, harshly. It is the same reason I get to the gate at the airport an hour early rather than a minute or two early.

  • ErikTheRed

    Dead wrong.

    Speaking as a business owner, there are two things to consider:

    1) This is an insanely complicated piece of legislation that we don't have the time to parse ourselves (and even if we could, the broader regulatory interpretations are well outside of our scope of expertise), so we rely on others to digest it, anticipate the interpretation, and give us advice. These people are worried about their reputations and liability, so they tend to err on the side of caution.

    2) For whatever reason, the authors of this bill decided to have the IRS enforce it. This turns the paranoia dial all the way to 11 (or maybe 15), because the IRS is the main area in US life where you're guilty until you can prove your own innocence. Even if you have the cleanest and most honest books on earth, an audit will probably cost you a few percentage points of your annual revenue - enough to wipe out a significant portion (or all) of your profits. Heaven forbid there be an actual mistake in them.

    So if there is even a question of whether the number is six months or twelve months, then the "safer" number will prevail - twelve months it is (unless you're a megacorporation that can afford to lawyer it out and buy forgiveness).

  • skhpcola

    Everything confuses progressive tools like pokeyblow. He's just another leftist troll like LarryG. Unlike Lartard, though, pokeyblow gets banned from commenting where he loiters very long.

  • pokeyblow

    And you drive 40 in 65 zones.
    Please. The original poster is wrong, DeLong (who checks things and lives in the real world, not the paranoid, delusional world of Obama fear) is right, or at least waiting for a documented correction, and the original poster unsurprisingly doesn't have the class to admit this.
    Unsurprising because I first saw this blog when the proprietor started whining about how unfair it was that his access to prime public lands was being cut off thanks to Ted Cruz. Unbecoming; embarrassing.

  • NL7

    It's hard not to read this post and think that a business owner has an interest in knowing how best to comply with rules while an economist has an interest only in theory. There are elaborate teams of specialists and structures - lawyers, government affairs specialists, industry groups - that help businesses understand and comply with new rules and regs. These people are paid to understand compliance and find good strategies. And business owners of course want effective compliance that saves money and avoids liability. Whereas an economist doesn't have economic or legal exposure, so will focus on the theory but not follow the details of compliance.

    This might be an unfair generalization, I'll grant, but it's basically a simplistic application of the "rationally ignorant voter" argument.

  • Kyle

    Content-free infantile name calling appears to be your usual posting MO.

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

    Because DeLong is a moron?

  • markm

    Not even the people who _passed_ the law know precisely what it is.

    Now, we don't need to drive 40 in a 65, because that law is clear and readily understandable. Even if you're afraid of the cop screwing up with the radar gun you probably won't avoid getting wrongfully tagged by driving slower, and generally the penalties aren't that high. (That's assuming you haven't been driving so badly and accumulating tickets so one more speeding ticket will subject you to license suspension and scofflaw fines - but people with that problem are far more likely to be going 80 in a 65 zone...) But with Obamacare, the cost of guessing wrong can cause a retroactive increase in payroll expenses of over 10%, which will bankrupt most service businesses. In most such businesses, profit margins are slim and payroll is far more than half of the total expenses.

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

    Depending on corporate reporting cycles, large corporations started making their adjustments to plans this year, because as others have
    pointed out, those changes are not instantaneous. This is true of both hours and plan compositions.

    (My employer began switching to HSAs this year, in anticipation of the Cadillac tax.I believe some hours were adjusted as well.)

    So yes, you’re completely DeWrong. As usual.

  • markm

    The correction is already clear in the statistics - fewer full time jobs and more part time jobs. See Meyer's previous posts on this topic. DeLong is trying to argue that the switch to part time must not really have been caused by Obamacare, because the costs haven't actually kicked in yet - never mind that the employers themselves are saying that they started reducing hours last January in order to avoid a substantial risk of being stuck with retroactive costs once the rules get figured out. DeLong's bias is showing.

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