As the Affordable Care Act's, aka Obamacare, rules edge ever closer to reality, one rule in particular is already beginning to affect business decisions.
In 2014, the rule that requires large employers to provide health insurance to full time employees or pay a $2,000/worker penalty, will go into force. In anticipation, some employers such as Pillar Hotels & Resorts (parent company of Sheraton hotels) are considering shifting more employees to part-time positions, to avoid falling under the rule's purview.
Alan Gladstone, CEO of Anna's Linens (with 1,100 employees), was cited in a WSJ article today, which explained that:
[T]he costs of providing coverage to all 1,100 sales associates who work at least 30 hours a week would be prohibitive, although he was weighing alternative options, such as raising prices.
While health insurance costs are only one part of a corporation's cost equation, and employers like Costco (which already provides health insurance to most employees) are unlikely to make any changes, any move towards a "part-time economy" is dangerous, particularly for young and low-wage workers who are trying to climb the economic ladder. In a 2010 report, the CBO confirmed that Obamacare's policies will have a tendency to hit low-wage workers the hardest, as firms will respond by "hiring fewer low-wage workers" or "[hiring] more part-time or seasonal employees," in lieu of full-time workers.
Although the job gains from September looked great on paper, the unemployment rate drop below 8 percent belied a perverse "new normal" - most of the jobs "created" were part time. As Mark Perry at AEI ideas, noted, the October report marked the highest employment level of "temporary help services" since 2008.
While increase in part-time employment versus full-time employment may be a symptom of a slow recovery, Obamacare's perverse incentives to employers threaten to strengthen that symptom into a chronic condition of the national economy.