Another Impact of Obamacare

The Labor Department released its April jobs data last Friday.  First, the good news: the labor force participation rate didn’t change from March—good news because it actually means more folks, in absolute terms, are participating, since the US’ population increased from March, and because while participation still is down from last January and remains near 30-year lows, it’s not dropping further.  Also, 165,000 new non-farm jobs were added in April—no great shakes compared with what’s needed for actual economic growth, but it’s better than even the upwardly revised number for March.  These combined to lower the unemployment rate a tick from March, to 7.5%.

Buried in the numbers, though, are some worrisome data [emphasis added].

[A] broader rate, known as the “U-6” for its data classification by the Labor Department, increased to 13.9% from 13.8% a month earlier.

In April, the rate ticked up as the number of workers who are part-time but want full-time work increased.  That came even as the numbers of hours worked also dropped this month for all workers.

The primary reason the hours are dropping is illustrated by this.

…the decision by some employers to keep fewer full-time workers on the payroll or reduce the hours of near full-time workers to avoid having to provide health insurance.

It’s not limited to private enterprise:

Consider the city of Long Beach.  It is limiting most of its 1,600 part-time employees to fewer than 27 hours a week, on average.  City officials say that without cutting payroll hours, new health benefits would cost up to $2 million more next year, and that extra expense would trigger layoffs and cutbacks in city services.


Overall, an estimated 2.3 million workers nationwide, including 240,000 in California, are at risk of losing hours as employers adjust to the new math of workplace benefits, according to research by UC Berkeley.  All this comes at a time when part-timers are being hired in greater numbers as US employers look to keep payrolls lean.

As the WSJ put it,

This raises the question about the kinds of jobs being created, and whether they can support a faster recovery.

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